KOSTI'S NEW IDLE PORT INDICATIVE OF CPA DELAYS

UNCLAS KHARTOUM 001926

SIPDIS

DEPT FOR AF/SPG, AF/EPS, EB/IFD, AND EB/ESC
DEPT PLS PASS USAID FOR AFR, AND ALSO PASS USAID

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV EFIN ECON EAID SU
SUBJECT: KOSTI'S NEW IDLE PORT INDICATIVE OF CPA DELAYS


1. (U) SUMMARY: In a December 4 visit to the city of Kosti, the "the
river gateway to the south," emboffs visited the city's new port
that remains unutilized due to Sudanese bureaucratic in-fighting.
Motivated by the signing of the Comprehensive Peace Agreement, the
Sudan Sea Ports Corporation (SPC) began work on a new port late in
2005 to speed the transport of goods from Port Sudan to the South
and ultimately support economic development in the South. Local
officials stated that a dispute between Port Sudan and Kosti
officials over port fee revenues has left the port completely empty
for over a year since its completion and eleven months since its
formal opening by Vice-President Ali Osman Mohamed Taha. END
SUMMARY.


2. (U) In 2005 the SPC began work on a new dry dock and river port
in Kosti to facilitate customs clearance procedures and alleviate
congestion in Port Sudan. Local officials from White Nile State's
Ministry of Investment and the Economy told emboffs that the idea of
the project came from the CPA's mandate to support economic growth
in the south (as mandated by the wealth sharing protocol, 1.7-1.9.).
Material with a final destination in the South should be
transported directly to Kosti's dry port for customs clearance,
inspection, and storage. Thus a new river port with space for four
large barges was created adjacent to the dry port to speed
transportation of goods to the south. Officials claimed that for an
introductory period, port fees would be reduced by 50% by using this
new facility.


3. (U) The dry port has an area of 2 million square meters with a
warehouse capacity for 150,000 containers in three warehouses (one
of 4000 square meters and two others of 1000 square meters). Two
reach stackers, four fork lifts with 10-ton capacity, and a 50 ton
crane were also purchased for the dry port site. Despite the port
not yet being operational, approximately 6 customs officials and ten
other employees of the dry port sat in empty offices during the site
visit.


4. (U) Local officials from the Investment Committee of White Nile
State stated that "political problems" prevented the start of the
dry dock's operations. Although they also emphasized that technical
difficulties with the communication system also prevented
operations, the General Director of the Resources Committee of White
Nile State, Khaidar Daoud Muhammad Touam, later told emboffs that
the real reason for its delay in operations is due to an ongoing
quarrel between Port Sudan and Kosti officials in the Sea Ports
Corporation. (Note: The Sea Ports Corporation is an independent
authorized body acting on behalf of the central Government and
holding the responsibility of operating and managing Sudan's ports.
End Note.) According to Touam, the former managing director of SPC
started the Kosti project, but was soon replaced by a native of Port
Sudan, Ibrahim El-Amin Ahmed, after the signing of the Eastern Sudan
Peace Agreement. According to Touam, Ahmed realizes that Kosti's
port will result in lost revenue to his home town and state and
therefore he has intentionally delayed its operations. Touam said
that he will travel to Port Sudan next week to lobby Ahmed and the
executive board of SPC, but that he expects that he and other
officials from White Nile State will have to raise the issue with
higher levels at the Ministry of Transportation.


5. (U) In a separate visit to Kosti's old and active port, the
director of the River Transport Company, Ismail Mahmoud Ismail,
expressed his disappointment that the South continues to import
material through Kenya and Uganda, rather than through Port Sudan.
Ismail did, however, acknowledge that his business has reaped a
peace dividend from the CPA, expanding its fleet of tow boats from 7
in 2004 to 13 in 2007, and currently constructing 46 additional
barges. Ismail stated that transportation through Port Sudan should
be more efficient and cost-effective than going through Kenya and
Uganda, but claimed that the Government of South Sudan imports
material from Kenya and Uganda so that it can bypass customs fees
and import items that would otherwise be illegal in the north such
as alcohol.


6. (SBU) COMMENT: Considering the failure that it represents, it was
surprising that White Nile officials chose to showcase their empty
new port. Although inspired by the CPA and intended to spark
economic development in the South, this multi-million dollar project
appears to have only benefited the north: the northern-based SPC
awarded contracts and expanded business relationships through its
construction; it employed workers almost entirely from the north
during construction; and the tax revenues from its operation will
only go to White Nile State and the Government of National Unity.
More importantly, Kosti's new port exemplifies much of what has gone
wrong with economic development aspects of the CPA where greed,
bureaucratic delay, and exploitation have left elements of the
landmark agreement utterly vacant. END COMMENT.

FERNANDEZ