Eritrea must look at its options
COMMENT: With relations between Eritrea and Ethiopia now back in positive mode – after a 20-year dispute – the Eritrean ports of Assab, in the south of the country, and Massawa in the north are the focus of strong interest from international port operators, writes Mike Mundy.
The name that is mentioned most frequently is that of Dubai-based port operator DP World. The UAE already has a military base in the port of Assab, extensively used in conjunction with its military activities in the Yemen as part of the Saudi-led coalition which aims to restore President Abd Rabbuh Mansour Hadi to power and crush the Houthi uprising.
Further, there are strong indications that the UAE together with Saudi Arabia will back the Ethiopia-Eritrea rapprochement with substantial funding, including for infrastructure development. It is hardly surprising then that many parties make the assumption that DP World will soon secure for itself a commercial port operator role in Eritrea.
Similarly, Moscow is known to be interested in setting up a ‘logistics centre’ in Eritrea – and as part of this undertake port investments. Russia’s Foreign Minister Sergei Lavrov and his Eritrean counterpart Osman Saleh among others have recently discussed this project.
At a more local level it is also understood that Ethiopia has indicated its willingness to make strategic investments in the Eritrean port system as part of a broad-based initiative to secure more port gateways and build competition with Djibouti, the current main gateway for Ethiopian maritime cargo. Such investments could include taking a stake in a new concession of a similar type to the one implemented by Ethiopia in DP World’s Berbera, Somaliland, project where it has taken a 19% equity stake.
In the final analysis, however, best fit partners in the port business are about more than the parties that make the first approach. It is to be hoped that Eritrea if it goes down the road of offering commercial port concessions does so by inviting all qualified parties to bid for the opportunities on offer and fully examining all the partner options open to it. There is no substitute for a proper concession bid process, with assistance from experienced advisors and run on a fully transparent basis, as a path to securing the best business partner and operating arrangements overall.