Djibouti port fees will fuel inflation: Ethiopia

Written by Reuters

ADDIS ABABA. Dec. 12, 2008 (Reuters) – The revival of a plan by Djibouti to charge Ethiopia an extra $22.5 million a year in port tariffs will push up inflation in the land-locked country, a senior Ethiopian business leader said on Friday.DJ

Ethiopia pays $700 million annually in port fees to the tiny Red Sea state, which has been its main gateway for imports and exports since it lost the ports of Assab and Massawa when Eritrea won its independence in 1991.

Djibouti had said the tariff hike would take effect in mid-August. But then the Ethiopian government said the move had been postponed indefinitely after Djiboutian President Omar Ismail Guelleh visited Addis Ababa in July.

Teferi Asfaw, deputy secretary-general of the Addis Ababa Chambers of Commerce and Sectoral Association, said the new charges had been imposed as of December 1.

“It is expected to create an inflationary situation,” Teferi told Reuters.

“Ethiopia will pay Djibouti a total of $722.5 million for port services annually. We consider this a huge burden and the government must seek an alternative.”

Teferi said Djibouti defended the increase back in August because of high fuel prices, which had since declined sharply. “Their argument does not hold water,” he said.

Djiboutian officials could not immediately be reached for comment.

Teferi’s organisation groups almost all Ethiopia’s major importers and exporters. Ethiopian government sources said a high-level delegation was due to leave for Djibouti at the weekend to voice the country’s concern.

Ethiopian traders are also concerned about a reduction of free storage at the port to eight days from 15 days for import cargoes and to three days from 10 days for export cargoes.

Ethiopia has nine state-operated freight vessels that operate from Djibouti to the Far East.

Ethiopia is building two container terminals at Modjo, 75 kms (45 miles) southeast of Addis Ababa, and at Semera in Afar region, 550 kms (340 miles) from the capital along the main rail and road route to the Red Sea port. Teferi said the government would also deploy 500 newly imported trucks to ferry goods.

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