STATUS OF DJIBOUTI'S DORALEH PORT

UNCLAS SECTION 01 OF 02 DJIBOUTI 000095 SIPDIS STATE FOR AF/E E.O. 12958: N/A TAGS: PREL DJ SUBJECT: STATUS OF DJIBOUTI'S DORALEH PORT 1.On January 8, 2006, Ambassador, DCM, the Acting Pol/Econ officer and LES Econ assistant visited Djibouti's new, still under construction Doraleh Port (to contain fuel and other liquid storage tanks, a refinery, a power plant, a container terminal and a duty free zone). Doraleh is a project important to Djibouti's president, Ismail Omar Guelleh, who envisions the eventual complex, built by Horizon Djibouti Terminals Ltd. under the direction Dubai Ports World (owned and therefore directed by the United Arab Emirates) as key to the economic development of Djibouti. Representing Horizon were Alain Siozac, the General Director of the new port, and his assistant, Terminal Manager Ayanleh Idriss. 2.The new Doraleh port facility will have 28 tanks when Phase 2, the construction of eight tanks, is completed in July 2006. The tanks are designed to contain refined petroleum products (Gasoline, Diesel, Jet A1, etc.),LPG, chemicals, edible oils, molasses or ethanol. At this time the US Navy leases six tanks containing ship and airplane fuels. However, because the terminal does not yet meet Navy/international security standards, USN (and US merchant) ships are not taking on fuel at the port. The port is working to correct security deficiencies, which focus primarily on the perimeter wall and access controls. An additional three tanks now contain Ethiopian ethanol that is destined for European markets. The port director said that the port will be able to load products onto fuel trucks starting in February 2006. 3.The Government of Djibouti (GoD) initially y requested Total and Shell (and Mobil, which has agreed to sell its stored products and Djibouti gas stations to Total, thus ending Mobil's presence in Djibouti) to transfer petroleum products currently stored at the old Djibouti port to Doraleh before the end of December 2005. However, the firms were given an extension because Doraleh port was not ready then to accept the fuel. Horizon is negotiating a new time for Total and Shell product transfer and expects this to occur no later than the end of July 2006. Total and Shell will be permitted to store fuel only for their local Djibouti markets (some 200,000 barrels per month). Ethiopian fuel requirements (2.2 million barrels per month), currently met partially by Total and Shell, have been awarded to Emirates National Oil Company (ENOC). Total and Shell may purchase fuel from ENOC and sell it to Ethiopians, if they choose. 4.The container terminal construction and management responsibility will fall under Dubai Ports World. DPW states that Chinese, Brazilian and French interests are among the bidders to construct the container terminal. It is said that the Chinese are offering to finance the project. 5.Electricity and water are important issues in this deficient-in-both nation. DPW plans to construct on site both a power generating plant and a desalinization plant, and included both in the bid package for the container terminal. The Djibouti electric company offered to supply the terminal's power needs because they are separately receiving funding from Arab donors to upgrade power capacity. This was not considered a viable option by DPW due to its extensive power requirements and its view that it needs a confident, independent supply. (Comment: This cable's drafter also served in Djibouti 1990- 1992, during which time he remembers power cuts perhaps ten times during the two year assignment. The day before drafting this cable, power to his residence was cut five times, albeit during unusually rainy weather with flooded streets. End Comment) RAGSDALE