Yemen-DPI partnership: where to now? [Archives:2008/1119/Local News]
By: Arafat Mudabish
Following several years of unresolved issues regarding the fate of Aden Port, Yemen's government recently agreed with Dubai Ports International, or DPI, which operates the United Arab Emirate's Jebel Ali Port in addition to several other ports in the area and around the world, to establish a 50-50 Yemen-UAE joint venture to run Aden Port.
This partnership comes three years after the Yemeni government twice invited international bidding to operate the port. According to the government announcement published at that time, the Tender Assessment Committee found that the bid from Kuwait and Gulf Link Transport Co., or KGL, was more feasible for the Yemeni government in the long run, whereas DPI's bid was more feasible in the short term.
According to government documents, a consulting firm Yemen's government appointed to manage the tender process recommended the short-term option – DPI's bid – although expected revenues were no better than those expected from the Kuwaiti firm's bid.
The issue stirred much public controversy at that time, with talk of a “suspicious” deal between the consulting firm and pro-DPI state officials involved in the tender. Some pointed to a conflict of interest between Aden Port and others DPI operates, i.e., Dubai's Jebel Ali Port, Djibouti Port, Oman's Salalah Port and Jeddah Port's South Terminal.
Some were of the opinion that DPI's bid to run Jeddah's South Terminal was better than its bid to operate the strategic Aden Port, despite the fact that the former is less significant and dynamic. They maintained that DPI's bid offered the Saudi government as much as 65 percent of revenues, with DPI bearing all other expenses.
That bid came after DPI failed to win the operations tender for Jeddah Port's North Terminal, losing the deal to KGL, which at that time offered the Saudi government half of revenues, whereas DPI offered only 35 percent.
DPI didn't offer the Yemeni government a share of the revenue, in contrast to its Kuwaiti competitor, which offered 80 percent of revenues by the end of the 30-year contract.
Signs of parliamentary refusal of the agreement with DPI surfaced in view of terms and conditions considered to be disadvantageous to Yemen. On the other hand, the rival Kuwaiti firm objected to the appointment of its competitor. All of these events compelled Yemeni President Ali Abdullah Saleh to revoke the DPI agreement before Parliament began discussing it. The problem currently isn't limited to the Kuwaiti company's relentless claim to receive the concession to operate Aden Port or the Yemeni government's persistence to work with DPI.
Another considerable hurdle obstructing any agreement between the Yemeni government and the giant Emirati firm is the claim of the Bawazir family, which established Yemenvest Company in association with Saudi Bin Mahfoodh Group and constructed Aden Free Zone in the wake of Yemen's 1990 reunification. The Bawazir family demands their share in the port, which they claim is as much as 30 percent, submitting several documents to corroborate their standing. Additionally, they've filed suit against the Yemeni government, first, to stop any disposal of the port, as disputes are being examined by the judiciary, and secondly, to regain their claimed rights.
Just a few decades ago, Aden Port was the world's third most important port, the first two being the United States' New York Port and Holland's Rotterdam Port. For a host of reasons, Aden Port still maintains a strategic location among other terminals in the region and the world. For instance, it is only four nautical miles from an international navigational channel, the nearest distance within the region. The port also enjoys natural protection in the form of a mountain chain. Additionally, its naturally deep waters can receive supertankers, a characteristic unavailable at any other regional ports.
Particularly when it's of the same caliber as DPI, a company wouldn't dare involve itself in any deal involving a project in such circumstances. Nevertheless, DPI's tireless attempt to strike a deal to manage and operate Aden Free Zone may be attributed to the fact that it and the Emirati government understand well the vitality of Aden Port and that, if professionally managed, it would pose a threat to the Emirates' own Jebel Ali Port in Dubai and other regional ports DPI operates, such as Djibouti and Salalah. The Yemeni government's persistence in entrusting the running of Aden Port to DPI is attributable, as it states repeatedly, to DPI's international reputation. Some state officials hope DPI will catapult Aden Free Zone, Aden Port and even the city of Aden itself into an era of prosperity.
Following the government's announcement of another agreement signed with DPI to establish a Yemen-UAE joint venture, it seems that the agreement itself remains mysterious and “confidential.” Of course, that's not in the interest of the Yemeni government, which has committed itself to transparency in tenders and competitions. Continuous gossip about the port will distort the Yemeni government's image in the eyes of Western donors. Amid its attempts to prove its concern about the future of the Free Zone and Aden Port, the Yemeni government needs to ameliorate the agreement's terms and conditions in order to ensure its rights and sovereignty and clarify its relationship with DPI and its local and regional partners.
Secondly, it must invite international bidding from major qualified firms in the field of ports management in order to obtain the best offers for Yemen to receive the utmost benefit.
The author is a correspondant of Sawa AMerican Radio, and founder of the first independant news site in Yemen altagheer.net. He had been working with Yemeni and regional newspapers for the las 15 years. He is member of the Arab and International Journalists Syndicate.
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