PORT SUDAN AS POTENTIAL LOGISTICAL SOLUTION FOR REGIONAL

UNCLAS SECTION 01 OF 03 KHARTOUM 001474 SIPDIS NSC FOR MGAVIN, LETIM DEPT PLS PASS USAID FOR AFR/SUDAN ADDIS ABABA ALSO FOR USAU GENEVA FOR NKYLOH UN ROME FOR HSPANOS NEW YORK FOR DMERCADO E.O. 12958: N/A TAGS: EAID PREF PGOV PHUM SOCI SMIG UN SU SUBJECT: PORT SUDAN AS POTENTIAL LOGISTICAL SOLUTION FOR REGIONAL FOOD AID NEEDS ¶1. (U) Summary: There is no recent history of vessels with USG humanitarian aid cargo waiting for berthing space due to port congestion outside of Port Sudan. The same can-not be said for Djibouti port to the south. In order to avoid delays of emergency food aid delivery to Ethiopia due to port congestion in Djibouti, the UN World Food Program (WFP) is working to shift a portion of the Ethiopia food aid tonnage to Port Sudan without disrupting current Sudan food aid operations. At the end of November, Port Sudan received the third vessel of food aid destined for Ethiopia since the flexible operation began in April. The vessel transported 27,000 metric tons (MT) of bulk wheat for Ethiopia and 5,000 MT for WFP Sudan. The governments of Sudan and Ethiopia are aware and supportive of these cross-border operations. As significant as these ad-hoc operations are in helping alleviate this most recent instance of Djibouti port congestion, it is important to highlight the current user-friendly operational approach within the port that could make Port Sudan part of the food aid logistical solution for the USG. As long as WFP Ethiopia shipments are conducted on a case-by-case, emergency basis, and particularly for bulk cargoes, no negative impact is anticipated on the ongoing WFP Sudan program. End summary. -------------- WFP Port Sudan Relationships, Procedures Advantageous -------------- ¶2. (U) Port Sudan has a large capacity, with a comfortable operating cushion built into the WFP Sudan port operation. Port Sudan comprises three different units: the Green Port has a quayside that can fit up to five vessels, depending on their individual/collective length overall; the North Port, which can accommodate two vessels simultaneously; and the South Gate container port, which can berth two container vessels at the same time. WFP has a favored working relationship with the private-sector SAYGA Flour Mills silo, which has a 110,000 MT silo capacity within the port, as well as an additional facility just off-port that can hold another 35,000 MT. The privately-owned DAL conglomerate owns SAYGA, and there is no shortage of capital investment. Another grain silo is currently well under construction and now leased by SAYGA (also within the port) with an anticipated additional 100,000 MT grain silo storage capacity. WFP has convenient, off-port private warehousing capacity of 14 to 17 purpose-built permanent facilities for 200,000 MT rented from Immarat Company and the flexibility to expand these rentals as required. Half of these facilities are leased in six-month tranches, while the other half are on shorter three-month leases to ensure flexibility. ¶3. (U) While WFP can utilize these warehouses for food aid storage depending on volume of food aid arriving at port, WFP operates on a "direct delivery" mindset in order to avoid extra handling costs in Port Sudan warehouses. WFP currently utilizes 12 short-listed trucking companies that can provide 100 percent contracted long-haul, direct-delivery capability to WFP hubs in El Obeid, Khartoum, Kosti, and Nyala. With this strong Sudanese private sector long-haul trucking capacity, WFP does not have to maintain its own trucking fleet. In addition, WFP has persisted in developing the rail delivery modality collaboratively with the Sudan Railways Corporation and utilizes rail for direct delivery of 1,200 MT/vessel to Nyala, South Darfur. ¶4. (U) All chartered vessels arrive with a charter party contract originating from WFP Rome, and a discharge rate is already stipulated. (Note: The discharge rate is the amount of metric tonnage that a ship's owners have contracted to discharge from the vessel each full day. End Note.) WFP Port Sudan has a history of "early dispatch," which indicates that discharge has finished in advance of the charter party contracted timeframe. The WFP port bulk discharge operation in Port Sudan is very flexible, reacting professionally to the discharge limitations, strengths, or other characteristics of the vessel chartered. For example, WFP has a contract with the SAGYA silo to discharge at an average rate of 8,500 MT per day if the vessel is transporting more than 30,000 MT, and a discharge rate of 6,000 MT is expected if the vessel carries less than 30,000 MT. If conventional discharge methods are required, then WFP's contract with Portserv is for a rate of 2,800 MT per day. The uplift ex-SAYGA Silo output rate for stored grain bagged for inland delivery is 2,000 MT/day. ¶5. (U) The movement of food commodities from the shipping vessel to trucks or warehouses results in significant container discharge at the South Gate container port. WFP Port Sudan has received more than 1,500 containers over the past calendar year up to the end of KHARTOUM 00001474 002 OF 003 October. The WFP container discharge system includes four separate operations: 1) identification and marshalling of containers at quayside in South Gate, 2) shunting of containers from the South Gate quayside marshalling area to the WFP container yard at Damadama using Port Authority local transport, 3) positioning of WFP containers for stripping and management of empty containers, and 4) determination of direct delivery to upcountry destination or delivery to local WFP warehouse and reporting. WFP can perform 60-100 container movements during the third shift of the day. Shunting then begins in the morning's first shift to the WFP container yard in Damadama. WFP maintains two Hyster 44s container handlers to facilitate all internal WFP container yard movements. Special acknowledgement should be made to the Port Authority for providing roughly 100,000 square meters of open, level container terminal space within the port confines at Damadama to WFP Port Sudan free of charge for container stripping operations. This in-kind donation by the Port Authority to WFP is illustrative of the close working relationship that WFP has been able to develop over time with the Port Authority. -------------- Port Sudan as a Safety-Valve for Ethiopia -------------- ¶6. (U) Sudanese customs officials consider WFP Ethiopia-bound shipments as transit cargo. Two bulk grain discharge shipments to Ethiopia--24,255MT and 24,501MT respectively--have been successfully conducted during the past year. WFP has negotiated a 50 percent reduction in the standard port fees per metric ton for this humanitarian transit cargo to Ethiopia. WFP is only required to pay 5-6 SDG/MT while the cargo is in transit rather than the current 14 SDG/MT for WFP Sudan cargo. The Government of the Federal Democratic Republic of Ethiopia (GFDRE) Minister of Agriculture and the WFP Ethiopia Head of Logistics visited Port Sudan three months ago to review the possibilities of transit cargoes. ¶7. (U) The use of Port Sudan for delivery of WFP food aid into Ethiopia through Gedaref/Metama is officially supported by both the Sudanese and Ethiopian governments, and WFP continues to work with both governments to resolve remaining logistical challenges, including the below-mentioned examples, for future transit cargo shipments. As Ethiopia is a land-locked country, the strategic importance of cultivating a positive relationship with the Government of Sudan (GOS) and gaining access to the use of Port Sudan cannot be overstated. The food aid program in Ethiopia is consistently one of the largest programs for both USAID and WFP each year, and the problems with the Djibouti port capacity are longstanding. With the improvement of the relationship between GDFRE and GOS, Port Sudan is emerging as a more seriously viable alternative. a) Customs Issues/Fees: From Port Sudan to Gedaref, the transit cargo remains under customs bond. During the first movement of more than 24,000 MT of food aid destined for Ethiopia, individual trucks could not be processed at Gedaref customs yard as Sudanese customs officials had to wait for the larger numbers of the convoy to arrive. If one truck had broken down on the road from Port Sudan, it would have delayed the entire convoy's movement. The WFP Ethiopia-contracted Sudanese transporter, Rayba, has now arranged that customs staff be assigned specifically to the Ethiopia transshipment operation at Gedaref. WFP Ethiopia is working closely with the GFDRE through their channels with the Sudanese government and is negotiating the complete waiver of the 15 percent VAT on transporter's invoices. This waiver is expected soon. b) Damage/Infestation within Sudan: At Gedaref, the transit cargo remains under customs control. If infestation is found, a separate customs-bonded warehouse has to then be established to separate and treat that cargo. Supervision fees must be paid to customs for that additional warehousing. In Gedaref, state authorities have established local fees 6 SDG/MT paid for any tonnage stored in Gedaref. During the first shipment bound for Ethiopia, WFP informed Gedaref authorities that the cargo was in transit to Ethiopia and asked for the fees to be waived. While authorities originally rejected the request, the cargo was eventually dispatched without paying these fees. c) Damage Resulting in GDFRE Rejection: Another example of the details that have to be worked out could be seen in the second shipment. Wet bags rejected by the Ethiopian EFSRA warehouse in Woreta were sent back to the Sudan border where Sudanese customs refused to allow entry of the trucks. WFP advised Woreta not to send any rejected cargo back to Sudan as this raises many complications KHARTOUM 00001474 003 OF 003 with authorities. -------------- Logistical, Customs Challenges Lessening -------------- ¶8. (U) The past two transit difficulties were in April-May 2009 and again in July-August 2009. Both instances were wheat cargoes with non-USG food aid. Each cargo of approximately 24,000 MT required 25 to 30 convoys traveling 600 km from Port Sudan to Gedaref, 150 km from Gedaref to Metama, 40 km from Metama to Shehady, and then a final 100 km from Shehady for final delivery to Woreta, Ethiopia. The first transit delivery required intensive customs negotiations and explanations. The second instance required considerably less money and less administrative time invested. The first instance took about one month to complete. The second instance took roughly 45 days, but the delays were attributed to the rainy season. -------------- Port Sudan Capacity, Smooth Operations Strategic for Horn of Africa -------------- ¶9. (U) As long as WFP Ethiopia shipments are conducted on a case-by-case, emergency basis and particularly for bulk cargoes, no negative impact is anticipated on the ongoing WFP Sudan program, due to the already established procedures in place and large capacity at Port Sudan. Port Sudan has a sustainable bulk grain discharge rate at quayside effectively allowing a vessel's discharge at Port Sudan to be completed in a matter of hours rather than the days/weeks seen at other ports in the region. Port Sudan has no history of vessel laytime at anchorage and no resulting demurrage charges. SAYGA's food-quality silo capacity inside the port is expanding. Port Sudan has a demonstrated off-take capability and enjoys strategic proximity to the two largest, by metric tonnage, WFP country programs (Sudan and Ethiopia). ASQUINO