Ethiopia has signed a major agreement to use the Red Sea port at Djibouti, Ethiopian Trade Minister Girma Birru announced on Monday.
He told a press conference in the capital, Addis Ababa, that the deal was vital for Ethiopia as Djibouti was the country's "natural port". Both countries would benefit from increased bilateral trade, he added.
Millions of dollars of goods are shipped each year through the port to Ethiopia. More than 28,000 barrels of oil a day are required just to meet Ethiopia’s fuel needs.
Girma said Ethiopia had access to nine ports but Djibouti was the best. “If we look at the distance of the all the ports Ethiopia could use, then Djibouti is the first – no doubt,” he said.
Formerly, Ethiopia used the Red Sea port of Assab in Eritrea. But in 1998 both countries fought a bitter war and the seaport is now closed to Ethiopia. Ethiopia turned to Djibouti after May 1998, but were unable to agree on terms for the use of the port. The deal is the first time both countries have signed a formal agreement.
Djibouti is now the closest port to the Ethiopian capital - some 780 km away. Port Sudan is almost double that distance.
But importers complain that Djibouti levels extremely high tariffs on goods coming through the port. Girma conceded that distance was not the sole issue. "If the cost of the port is very high then maybe a port that is further away may be economically viable," he noted. “But I think the Djiboutian government will understand this and make it as competitive as possible.”
“There are no political differences between Djibouti and Ethiopia, but in the region of Somalia we have differences of opinion," he added. “But that does not put our relationship in any kind of danger.”
He said the deal meant Ethiopia had guaranteed a permanent right of access from the sea and unhindered transit through Djibouti’s territory. Goods would also be free of taxes and customs duties.
Ethiopia also has access to Port Sudan after a recent visit to Sudan by the prime minister Meles Zenawi.
“We will use Port Sudan,” said Girma. “Our agreement with Djibouti does not prevent us from using other ports. Port Sudan might help us to develop the western part of our country."
Djibouti has also agreed to give Ethiopia 60 days' notice if there is to be any change in tariffs. A ministerial team from both countries will meet every six months to iron out any difficulties that might arise.