Logistics

Doraleh Multipurpose Port (Phase I)

Doraleh littoral, Djibouti City.
Written by David Styan on .
The Doraleh Multipurpose Port (DMP) is the core of the extensive investment in Djibouti by China Merchants Group (CMG). At the confluence of the Red Sea and the Indian Ocean, the port links to both the Addis Ababa–Djibouti Railway—the largest Chinese-financed infrastructure project in East Africa—and a new international free-trade zone established by a consortium of Chinese investors headed by CMG. CMG’s investment in the DMP is the foundation of its broader strategy to transform Djibouti into an international trade hub.

Basic Information

Name: Doraleh Multipurpose Port (Phase I)
Chinese Name: 多哈雷多功能码头(一期)
Location: Doraleh littoral, 12 kilometres west of Djibouti City.
Type of Project: Logistics.
Project Developer(s): Port de Djibouti S.A. (PDSA), which is 66.5% owned by Djibouti Ports and Free Zones Authority (DPFZA) and 23.5% owned by China Merchants Port Holdings Company Limited (a subsidiary of China Merchants Group).
Main Contractor(s): China Civil Engineering Construction Corporation (CCECC, a subsidiary of China Railway Construction Corporation) and China Construction Harbour and Channel Engineering Bureau Group Company Limited (a subsidiary of China State Construction Engineering Corporation).
Financier: Export–Import Bank of China (405 million USD).
Cost: 580 million USD.
Project Status: Operational since 2017.

Project Outline

The Doraleh Multipurpose Port (DMP) is developed by Port de Djibouti S.A. (PDSA), which since December 2012 is 66.5% owned by Djibouti Ports and Free Zones Authority (DPFZA) and 23.5% owned by China Merchants Port Holdings Company Limited (CMPort, formerly known as China Merchants International Holding, a subsidiary of CMG).

Construction of the DMP began in 2014 and the port opened in May 2017. Construction was contracted to China Civil Engineering Construction Corporation (CCECC, a subsidiary of China Railway Construction Corporation) and China Construction Harbour and Channel Engineering Bureau Group Company Limited (a subsidiary of China State Construction Engineering Corporation). CCECC is also one of the main contractors on the railway connecting Djibouti to Addis Ababa, Ethiopia’s capital, and the DMP is supposed to serve as the outlet to the sea for the railway.

The DMP itself covers 690 hectares on the Doraleh littoral, 12 kilometres west of Djibouti’s capital city. Phase 1 of the DMP provides six berths along 1,200 metres of quayside, with each berth providing access to ships drawing up to 16–18 metres. A second phase of development is scheduled to double the number of berths. The port was designed to provide 35,000 square metres of warehouse facilities. Inaugurated in 2017, the DMP is 4 kilometres west of Djibouti’s other modern port facilities, the Doraleh Container Terminal (DCT) and Horizon Oil Terminal. They are separate from Djibouti’s old port facilities, which are clustered around the historical city centre. CMG has proposed a highly ambitious urban renovation project for Djibouti’s old port and city. However, in 2022, this remains speculative, with neither funding nor planning agreed.

The DMP is not to be confused with the DCT facility, which is geographically and financially a separate port, although media accounts frequently mix the two. Originally built for and managed by the United Arab Emirates maritime logistics giant DP World, the DCT is the subject of a protracted legal struggle between DP World and the Djiboutian Government. Because of CMG’s acquisition of 23.5% of shares in PDSA, which in turn owns 66.6% of the DCT, DP World argues this violates its concession rights in the DCT. In 2019, DP World sought a legal judgement against CMG in the Hong Kong courts. This was a tactical move as part of DP World’s larger campaign to gain redress and compensation for the DCT.

CMG seeks to promote a development model known as ‘port–park–city’ in Djibouti, which it first pioneered in Shekou, Shenzhen, China. CMG has also invested in the 240-hectare Djibouti International Free Trade Zone (DIFTZ), which is adjacent to the DMP and codeveloped with DPFZA and two other Chinese companies, Dalian Port Authority and IZP Group. Inaugurated in July 2018, the zone is the first phase of what is planned to eventually be Africa’s largest free-trade zone. In December 2020, CMG signed an investment agreement with DPFZA for the East Africa International Special Business Zone, which is expected to receive a total investment of more than 3 billion USD in six phases over 10 years, according to DPFZA.

The DMP project was financed by a mixed loan of 405 million USDp. 22 (including a 344 million USD Preferential Export Buyer’s Credit) from the Export–Import Bank of China (China Eximbank). The precise terms of the loan are opaque, in part because of the complex financial and managerial structures of Djibouti’s port holdings. The construction of the DMP overlapped with several other major Chinese projects in and around Djibouti—notably, the far larger Addis Ababa–Djibouti Railway, for which the DMP is the de facto terminal. CMG, CCECC, and other major Chinese contractors were also active in other port and infrastructure projects in Djibouti between 2013 and 2018, including ports for livestock and salt. China Harbour Engineering Company (CHEC) was the lead contractor for the Port of Ghoubet, a 64 million USD facility providing an outlet for salt from Lake Assal, west of the DMP. CHEC also played a key role in constructing the foundations of the DMP. The vast platform and skilled personnel used in the construction and positioning of undersea foundations were brought from CMG’s port in Hambantota, Sri Lanka. Finally, the DMP is adjacent to the People’s Liberation Army Navy’s first overseas ‘logistics facility’.

A view from the Port of Doraleh, Djibouti, during Secetary-General Ban Ki-moon’s visit to the port. UN Photo/Evan Schneider 28 October 2014 (CC).

Impacts

The location of the DMP on the sparsely populated Doraleh littoral to the west of Djibouti City meant the project did not have significant land-based environmental or social impacts. Two other major modern port facilities lie to the east of the DMP, which is on the main Addis Ababa–Djibouti highway. A branch line of the Addis Ababa–Djibouti railway has been constructed to the port.

The maritime environmental impact of the ports is little publicised but will be significant. The DMP (as with the DCT and Horizon terminal) was built by concrete infilling into the sea (much of the old city of Djibouti as well as the old French colonial port’s quays and facilities were built on similarly reclaimed land). Greater use of quays by far larger ships is likely to damage the fragile marine ecosystem of the Gulf of Tadjourah, with Doraleh, Ghoubet, and Tadjourah all attracting more maritime traffic and pollution. Some local fishermen also link the illegal arrival of Chinese trawling fleets off the coast of Djibouti to Chinese investment in the country.

The author’s fieldwork in 2015 found that most of the workforce for the DMP was Chinese and other foreign labour, and as such provided few employment opportunities for Djiboutians. While state finances should benefit from port fees and tax revenues in the long run, the principal Djiboutian beneficiaries to date appear to be those in the presidential entourage, the Port Authority, and associates of the investment vehicles linked to port development—notably, Greater Horn Investment Holdings (GHIH). There has been much discussion about the fiscal impact—in particular, the debt sustainability—of the DMP. While the DMP is expected to be profitable, Djibouti’s overall sovereign debt to China is a significant concern given the state’s weak revenue base. China Eximbank provided a loan of 492 million USD for the 100-kilometre Djiboutian section of the Addis Ababa–Djibouti Railway, alongside the 405 million USD credits for the DMP, taking Djibouti’s debts to the bank to close to 1 billion USD. However, a significant debt rescheduling occurred in August 2019: Djibouti’s finance minister announced in a tweet an extension of the railway-related loan from 10 to 30 years, with interest rates lowered to 2.1% above the London Interbank Offered Rate.

In-Depth Sources

Aden, Mowlid and Robert McCabe. 2021. ‘Djibouti: Ports, Politics and Piracy.’ In Capacity Building for Maritime Security: The Western Indian Ocean Experience, edited by Christian Bueger, Timothy Edmunds, and Robert McCabe, 223–48. London: Palgrave Macmillan. Link.

Cabestan, Jean-Pierre. 2020. ‘China’s Military Base in Djibouti: A Microcosm of China’s Growing Competition with the United States and New Bipolarity.’ Journal of Contemporary China 29(125): 731–47.

Pairault, Thierry. 2017. Djibouti et les routes électroniques de la soie [Djibouti and the Electronic Silk Road]. Paris: EHESS. Link.

Pairault, Thierry. 2018. ‘La China Merchants à Djibouti: de la route maritime à la route numérique de la soie [China Merchants in Djibouti: From the Maritime Silk Road to the Digital Silk Road].’ Revue Espace Géographique et Société Marocaine 24–25.

Styan, David. 2020. ‘China’s Maritime Silk Road and Small States: Lessons from the Case of Djibouti.’ Journal of Contemporary China 29(122): 191–206.

Updated on 4 March 2022.


David Styan teaches international relations at Birkbeck College, University of London. He has written extensively on political and economic issues in the Horn of Africa. Recent published work includes articles on the role of China and other foreign powers in the Red Sea region.

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