Somaliland parliament Monday unanimously endorsed a port management agreement which will grant the Dubai based DP World rights to run the Port of Berbera for the next 30 years.
Following a three days debate in the House, majority of the lawmakers, 69 out of 74 voted in favour of the concession deal while 4 MPs rejected.
The agreement, which Goobjoog News has seen will lead to the creation of a shareholding company with a concession to manage and operate the Port of Berbera and the associated infrastructure in Somaliland.
DP World, which will inject an initial $10 million in form of equipment to support the Berbera Port Authority (BPA) and a further $5 million in cash will control 65% stake while the BPA being the grantor will take the remaining 35%.
Out of the 35% shareholding, BPA will get a direct 25% shareholding in consideration for awarding the Concession Agreement and transfer of existing assets and water fronts to the new company, the contribution of which is in kind.
The remaining 10% of the shares will be awarded to BPA in consideration of a contribution in cash. Until this contribution is fully effected, DP World will retain 50% of the dividends from the BPA shareholding of the 10%.
DP World said in a statement May this year the $442 million project will be phased over time and is dependent on the volumes generated at the port. It will also involve the setting up of a free zone to help support the development of Berbera’s trade corridors, the global port management company noted.
According to DP World, the investment will attract more shipping lines to East Africa and catalyse economic growth in the region.
Based on the agreement, new company upon handover will absorb employees currently at the port based on a needs assessment basis while the rest will remain with the Berbera Ports Authority.
In the agreement also, the new Company will enjoy a corporate tax holiday of 100% for the first ten years of the term and 50% for the next five years. This in effect means the company will not pay taxes for the periods indicated.
DP World in its websites notes that it has a portfolio of 77 terminals in 40 countries across six continents with significant presence in both high-growth and mature markets.