NAIROBI Djibouti's port authority is close to securing $4.4 billion from international banks to finance the building of five new ports in the next four years to meet growing demand for trade boosted by South Sudan's gaining of independence.
The horn of Africa nation's main port primarily serves its landlocked neighbour Ethiopia, which accounts for about 70 percent of traffic, but began handling landlocked South Sudan's trade after the country seceded from Sudan in July.
Traffic through the port, run by Dubai's DP World, the world's third-largest port operator, is seen as a key economic indicator for the region as a whole. DP World also runs the Doraleh Container Terminal, with an annual handling capacity of 1.2 million TEUs (20-foot equivalent units).
"Our total investment in the port and marine services related business is $4.4 billion for the five ports and dry dock development and free zones," Aboubaker Omar Hadi, chairman of the Djibouti Ports and Free Zones Authority told Reuters.
"We have secured up to 85 percent. We are discussing with our traditional lenders. We are hoping to conclude and finalise the issue of financing in the coming weeks," he said, speaking on the sidelines of an infrastructure conference in Kenya's capital, Nairobi.
Hadi said that besides loans from China, Brazil and the Africa Development Bank (AfDB), the port would be financed up to 35 percent from internal revenues.
Some of the new ports will include Tadjourah, located on the north coast of Djibouti is expected to handle 4 million tonnes of potash exports a year and Port of Goubet will have a capacity of 4.5 million tonnes a year of salt exports both by end of 2013.
Funds for another, the Damerjog livestock port, and phase II of Tadjourah are yet to be secured, Hadi said.
BE LIKE TANGIER, DURBAN PORTS
Djibouti's container port handled 705,000 TEUs in the whole of 2011 and that will rise further this year.
"We are going to end this year with 900,000 TEUs, so we hope by mid-2013 Djibouti will be the third African port to cross the 1 million TEUs, after Durban and Tangier in Morocco," Hadi said.
The tiny red sea nation also plans to handle cargo from other landlocked countries in the east African region as well as parts of southern Africa, taking advantage of congestion at Kenya's main port, Mombasa.
"What we are expecting in terms of (total) throughput in South Sudan volume currently, is 6.5 million tonnes," Hadi said, referring to the potential trade of South Sudan.
"Out of the 6.5 million tonnes, we are planning to move through Djibouti, 70 percent. This would be 15-20 percent of the total volume of Djibouti port," he said, adding it would be achieved in the next 12 months.
South Sudan, building from scratch after years of civil war with the north, raised its shipment volumes through Kenya's port in 2011 by 87 percent, becoming the second biggest user of the Mombasa port after Uganda.
Djibouti, located on one of the world's busiest maritime sea routes, hosts France's largest military base in Africa plus a major U.S. base, and the port is used by foreign navies patrolling busy shipping lanes off the coast of Somalia to fight piracy.
The country also plans to double its main port's container capacity to 3 million TEUs in the next two years, after a $330 million expansion.
"We are on the feasibility study ... and it will be completed by May this year, after that we will decide when we are going to start construction," said Hadi.