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OO RUEHROV
DE RUEHDS #2285/01 2651204
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O 221204Z SEP 09
FM AMEMBASSY ADDIS ABABA
TO RUEHNR/AMEMBASSY NAIROBI IMMEDIATE 4041
RUEHC/SECSTATE WASHDC IMMEDIATE 6261
INFO RUCNIAD/IGAD COLLECTIVE
RUEWMFD/HQ USAFRICOM STUTTGART GE
RUEAIIA/CIA WASHINGTON DC
RUEPADJ/CJTF HOA
RUEKDIA/DIA WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RHEHAAA/NSC WASHDC
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS SECTION 01 OF 02 ADDIS ABABA 002285 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PREL SO ET
SUBJECT: FRENCH FIRM PROJECT TO REHAB BERBERA 
 
¶1. (SBU) At a September 16 dinner organized by the French 
Ambassador, representatives of the French firm Bollore Group 
briefed the British, EU, and U.S. heads of mission on a 
proposal to rehabilitate and operate the port of Berbera in 
Somaliland.  The Bollore Group representatives reported that 
the proposal had been in development for months, and that a 
draft of their final proposal had been presented to 
Somaliland President H.E. Dahir Rayaale Kahin earlier that 
day.  The company representatives and the French Ambassador 
also indicated that the proposal has the firm backing of the 
Ethiopian government, including PM Meles. 
 
¶2. (SBU) In brief, the Bollore Group proposes substantial 
investment to rehabilitate Berbera,s port infrastructure 
including quays, storage, equipment, and organizational 
overhead and systems, with subsequent operations of the port 
to be handled by a new company with equity shares held by the 
Bollore Group, the Somaliland government through the Berbera 
Port Authority, and the Ethiopian government.  While the 
company representatives were vague regarding specific 
shareholding arrangements, they indicated that the Bollore 
Group would hold a sufficient percentage as to assure 
management control and sound commercial practices.  (Comment: 
The implication of the presentation was that negotiations 
remained regarding specific share interests.  End comment.) 
The company indicated that their business plan was based on a 
goal of attracting 30 percent of the traffic in the area over 
10 years, primarily consisting of imports to Ethiopia with 
some export traffic, in direct competition to the area,s 
current primary port in Djibouti.  The Bollore Group already 
operates or supports a number of African ports, and through 
the new Berbera port company would help facilitate customs 
and transit procedures in Berbera and Ethiopia, the latter 
with support of a &dry port8 facility to be built at or 
near the border.  As well, the Bollore Group will help 
develop a commercial and marketing strategy for the port and 
transit corridor. 
 
¶3. (SBU) In response to questions, the company 
representatives were very firm that insurance rates had 
already been secured through Lloyds that would provide 
adequate coverage at competitive rates, and they appeared 
confident that they would be able to match or beat Djibouti 
port rates and services relative to Ethiopian traffic.  Among 
other items, they noted a commitment to provide priority 
berthing to respond to Ethiopian Shipping Lines (a 
state-owned enterprise) recommendations to ensure good 
Ethiopian shipping services. 
 
¶4. (SBU) Discussions suggested the two major risk 
considerations for the Bollore Group were adequate security 
conditions to be provided to the port, apparently largely to 
be supplied by the Somaliland government, and the road 
running to the Ethiopian border.  The Bollore representatives 
reported they had undertaken an assessment of the road, and 
it would clearly need upgrading and reinforcement to handle 
effectively the anticipated traffic loads.  Development of 
the road was not included in the Bollore proposal, with the 
suggestion that the Group was looking to potential donor 
funding, specifically European Union financing, for this 
project. 
 
¶5. (SBU) The Bollore Group's proposals were supported by 
extensive documentation and plans.  The group reported strong 
support in Somaliland and Addis Ababa, and they appealed for 
general support for the project by European and American 
governments. 
 
¶6. (SBU) Comment:  Obviously the idea of a viable second 
ocean port outlet would be appealing to the GOE.  Enthusiasm 
in Addis for the project would be fairly easy to generate, 
particularly if such support came at low financial or other 
risk to the GOE, which would seem to be the case.  Likewise, 
if successful the port operation would almost certainly 
become the primary source of revenue to the Somaliland 
government, presumably with attendant support from that 
quarter.  It is unclear what significant commercial 
arrangements would remain to be negotiated beyond the 
specific share composition of the new port operating company, 
but the Bollore company representatives did not appear 
particularly concerned on that score.  The major remaining 
variables clearly center on minimally acceptable security 
conditions, and the corridor road development.  In fact, the 
 
ADDIS ABAB 00002285  002 OF 002 
 
 
Managing Director of Ethiopian Shipping Lines recently 
expressed concerns about these two issues to Embassy 
officers.  If the latter is assured by the EU and/or other 
donors, the major remaining factor would seem to be an 
assessment of security conditions.  The Bollore Group reps 
indicated the Group is no stranger to questionable operating 
environments in Africa, including security issues, but the 
Group obviously still is keeping an eye on this area.   No 
specific requests were addressed to the U.S. government 
during the presentation, although EU support for the road, 
and active British support were clearly desired.  End 
comment. 
MEECE