5 January 2014

Ethiopian Delegates Leave for Djibouti Amidst Transit Tensions

Photo: allAfrica.com
The port city of Djibouti.

The delegation is hoping to convince the Djibouti authorities to rethink their decision on the transit processes

A high level delegation, led by Transport Minister Worqneh Gebeyehu, left for Djibouti on Friday afternoon. They are hoping to overturn a decision by the Djibouti government to halt the transit of containers unless fees are paid in advance.

The delegation comprises of seven senior officials of Prime Minister Hailemariam Desalegn's administration, including Mekonnen Abera, director general of the Ethiopian Maritime Affairs Authority, sources disclosed to Fortune.

The delegation is scheduled to meet its counterpart in Djibouti for two-day talks, which will be led by Moussa A. Hassan, the Djibouti minister of Infrastructure & Transport, and comprises of Illyas M. Dawaleh, minister of Economy, Finance & Planning, and Aboubaker O. Hadi, chairman of Djibouti's Ports & Free Zones Authority (PFZAD).

The bilateral meeting was provoked after Aboubaker's office issued a directive, on November 28, 2013, revising a regulation that allows Ethiopian freight forwarders to clear containers from ports in Djibouti and get invoiced for transit fees two weeks after their release. The new directive changes this and imposes a requirement on freight forwarders in Djibouti to "present a bank transfer letter in hard currency" in order to secure the release of containers from the Djibouti and Doraleh ports.

Originally setting the deadline for December 7, 2013, authorities in Djibouti have now extended this until January 15, 2014.

"The purpose of our visit to Djibouti is to ensure the status quo," said a senior administration official who has travelled to Djibouti as a member of the delegation.

He meant the return of the container clearing procedures to its previous state of affairs.

Djibouti freight forwarding companies pay fees for port handling, vessel agents, container demurrage and storage for cargo which has remained at the port for more than eight days on behalf of Ethiopian forwarding agents. They send original receipts for these expenses as well as invoices claiming commissions from their Ethiopian partners. This is so the latter is able to access foreign exchange from commercial banks to order transfers.

Companies in Djibouti have been complaining over the years that they are owed close to 20 million dollars by their Ethiopian partners. The latter blame banks for keeping them in the cold before granting them access to foreign exchange.

"We accept that they have legitimate concerns we need to address," said a high ranking government officials who is in Djibouti to negotiate the impasse. "But the way they want us to respond is not acceptable."

Indeed, the move Djibouti has taken to make its point has made Ethiopian businesses furious, and is perceived as a small harbour state twisting the arms of a large landlocked neighbour.

"They have already begun to block the passage to containers, even before the deadline arrives," said a manager of a freight forwarding company in Addis Abeba, working in partnership with a prominent agent in Djibouti.

Authorities in Addis Abeba hope that Djibouti relaxes its latest demand. They believe there is no reason why it should not honour a port utilisation agreement its government signed in 2003, which stipulates that neither country can act unilaterally in breach of the agreement.

"I'm confident that we will work this out, with their officials coming back to Addis Abeba in the next few weeks," said a senior government official working for the customs authority.

However, the delegation that has travelled to Djibouti is expected to arrive back in Addis Sunday evening.

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