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Legal battle for control of Djibouti Ports comes to Hong Kong (13.02.2019)

China Merchants Port Holdings controls the controversial 1,150-hectare Port of Hambantota, which Sri Lanka handed over to China on a 99-year lease.

HONG KONG, China, February 13, 2019 – One of the world’s largest port operators has sued a Chinese state enterprise in Hong Kong over infringement of its exclusive port agreement with a strategically located African nation, in the city’s first court case involving China’s Belt and Road Initiative.

FactWire (www.FactWire.org) has obtained a legal filing by United Arab Emirates’ DP World (FRA: 3DW) at the Hong Kong High Court against China Merchants Port Holdings Company Ltd (HKEX 0144), accusing it of causing the Djibouti government to revoke the firm’s exclusive right to run the country’s ports.

Hong Kong-based China Merchants Port Holdings, a subsidiary of state enterprise China Merchants Group, deals mainly in the construction of ports, marine container logistics and operating container terminals.

It has actively participated in large-scale port infrastructure projects in multiple countries under China’s ambitious Belt and Road Initiative in recent years.

China Merchants Port Holdings controls the controversial 1,150-hectare Port of Hambantota, which Sri Lanka handed over to China on a 99-year lease.

Its inroads into Djibouti, located strategically between the Arabian Sea and the Mediterranean Sea, has for years been at the centre of legal disputes between the African nation and the UAE state enterprise.

In the writ of summons filed to the Hong Kong court in August last year, DP World accused the company for causing the Djibouti government to nationalise the Doraleh Container Terminal, despite the 30-year concession agreement that allowed DP World to exclusively run the terminal.

DP World, which operates 78 ports in 42 countries including Terminal 3 in Kwai Chung, Hong Kong, said under its agreement with the Djibouti government, it would have “full and exclusive right to establish, develop, and operate the Doraleh site”.

The concession agreement also said Djiboutian authorities cannot grant concessions for any other port capable of handling ocean-going vessels or free zone facilities within the country for the duration of the agreement.

The concession agreement took effect in February 2004 for a period of 30 years with the option for two 10-year renewals.

Joint-venture company Doraleh Container Terminal S.A. (DCT) was created to develop and operate the terminal.

The Djibouti government held 66.66 percent of DCT’s shares under state enterprise Port Autonome International de Djibouti (PAID), while DP World held 33.34 percent through its subsidiary Dubai (International) Djibouti FZE (DID).

Despite being a minority shareholder, DP World had the right to appoint most board members of DCT, thereby retaining control of the company’s operations and management.

Two years later, both parties signed a 2006 Concession Agreement in which DID relinquished their role in the development of the Doraleh Container Terminal.

However, DID’s exclusivity right over other port and free zone projects remained in full force.

Economic hindrance

Doraleh Container Terminal commenced operations on February 2009 but the Djibouti government began expressing dissatisfaction with its agreement with DP World.

It said the concession agreement “gave a foreign company the opportunity to oppose the fundamental interests of the Republic of Djibouti by hindering its economic and social development process”.

Three years later in 2012, China Merchants Port Holdings began negotiating a partnership with Djiboutian authorities over the development of ports and free-trade zone projects in the nation. In July that year, they signed a strategic partnership agreement.

The Chinese firm is a direct competitor of DP World and was actively looking to invest in ports to strengthen its position in East Africa.

Djiboutian authorities sold 23.5 percent of its shares in DCT to China Merchants Port Holdings, effectively allowing the Chinese firm to hold 15.67 percent of the shares, contradicting the concession agreement, the legal filing said.

With China Merchants Port Holdings acquiring an indirect shareholding in DCT, Djibouti was bypassing its contractual obligations and implementing its partnership with the Chinese firm, the filing said.

In 2014, China Merchants Port Holdings and Djibouti decided to build Doraleh Multipurpose Port next to the Chinese People’s Liberation Army Support Base in Djibouti.

Chinese firms China Civil Engineering Construction Corporation Ltd and China State Construction Engineering Corporation began construction on the multipurpose port in the same year.

Operations at this port began in mid-2017, also in contradiction of the agreement between Djibouti and DP World, the UAE firm said.

At the multipurpose port’s launching ceremony, the Djibouti government signed a deal with China Merchants Port Holdings to build a new Doraleh International Container Terminal, to be located between the Doraleh Container Terminal and the multipurpose port.

New Shekou

According to the official Belt and Road Initiative website, the then Executive Director and Vice Chairman of China Merchants Port Holdings Hu Jianhua suggested plans to build a new port to Djibouti president Ismail Omar Guelleh in 2013.

Hu’s proposal was to build a new Shekou, part of the China (Guangdong) Pilot Free Trade Zone, complete with a new port, a free trade area and to transform an old port terminal into a business and residential centre.

The website said China Merchants Port Holdings invited Guelleh and other Djibouti stakeholders to inspect the “thriving” Shekou port. It said by learning about the history of Shekou, Djibouti will decide to cooperate with China Merchants.

According to DP World’s legal filing, Djibouti attempted to revoke DP World’s exclusive agreement by using allegations of corruption, while it developed its partnership with China Merchants Port Holdings on various projects.

In 2012, Djibouti sued Abdourahman Boreh, a former presidential confidante who was involved in the negotiation and execution of the agreement between DP World and Djibouti, for corruption at the High Court of England and Wales. The case was thrown out.

Djibouti again sued Boreh in 2017 at the London Court of International Arbitration for bribery and those charges were again dismissed. The court found no corruption was involved.

Nevertheless, Djiboutian authorities seized control of the Doraleh Container Terminal on February 22, 2018 and transferred concession staff and assets to Societe de Gestion du Terminal (SGTD), a public company created to manage the terminal.

“SGTD, whose sole shareholder is the State of Djibouti, has successfully taken over the operations of the Doraleh container terminal,” the Djibouti government had said in a press release, which highlighted the unfairness of its concession agreement with DP World.

“The implementation of this concession agreement was severely prejudicial to the fundamental interests of the Republic of Djibouti, to the development of the country and to the control of its most strategic infrastructure asset.”

DP World in February last year sued Djibouti at the London Court of International Arbitration over the takeover of the terminal.

Seven months later, the court ruled in favour of DP World and stated that its agreement with Djiboutian authorities is still valid and binding.

DP World, China Merchants Port Holdings and Djiboutian authorities did not respond to FactWire’s questions.

Strategic placement

An International Monetary Fund report said Djibouti’s external public debt to GDP ratio has already reached 85 percent.

At the end of 2016, 32 percent of this debt was owed by the central government. Sixty-eight percent consisted of government-guaranteed debt of public enterprises, 77 percent of which was owed to China’s EximBank, which is directly under China’s State Council.

In other words, the debt that Djibouti owes China is about 44 percent of its GDP.

Located on the Horn of Africa, Djibouti’s strategic location by the Bab-el-Mandeb Strait, which acts as a gateway between the Gulf of Aden and the Red Sea and the adjacent Suez Canal, makes it a desirable location for foreign military bases.

China’s first overseas military base was set up there in 2017.

The US established their base in Djibouti following the attacks on Sept 11, 2001.

It is also home to French and Japanese military bases.

Read More Here: factwire.org/single-post/2019/02/10/Legal-battle-for-control-of-Djibouti-ports-comes-to-Hong-Kong (https://bit.ly/2E2ecns)

Video: https://www.facebook.com/factwireworld/videos/2306575722708744/ (https://bit.ly/2S0TjwR)

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Zimbabwe: Press Statement by President Emmerson Mnangagwa on Invictus Energy finding Oil in Muzarabani (01.11.2018)

Sukulu Phosphates Plant: A Chinese Nugget!

Well, it had to come to this. On the opening day of the Phosphates Plant in Sukulu in Tororo District. Someone digs into the back history of the industrial adventure done today. Like we had to have the knowledge of the President launching it for the first time:

President Museveni launched the construction of the complex in August 2014. The construction work was expected to be completed by the end of this year, however, there were delays in securing funding from the banks, and also technology that will be employed” (Uganda7 – ‘Sukulu fertiliser factory to open in October’ 25.07.2018).

Therefore, this is a long story, even to the early days of the Museveni administration, when they were conducting studies with African Development Bank and the World Bank to find a good way of utilizing the reserves and mineral rich area of Tororo. This they started on in 1989. Surely, the President has forgotten about the companies and the ones involved back than. The study of the possible comes from back-then. The one well known, as the original studies back to 1950s is not that accessible. However, it is more to the story. Before it became a Chinese Nugget and a possible mine for them.

Sukulu Hills:

The Study concluded that the Sukulu Hill deposits, the largest one in East Africa, with reserves estimated at about 230 million tons of residual soil with an average grade of 11-12Z P205, are easily mineable–as confirmed by a successful trial mining test executed under the Study; and furthermore, that on-site beneficiation of the rock could upgrade the P205 content up to 40-44Z, a level among the highest in the world. In order to select the optimal plant configuration, the Study considered 29 different scenarios, from the simplest ones (ground rock, partially acidulated rock, single superphosphate)to the most complex (triples uperphosphate,mono-ammonium phosphate, diammonium phosphate), at different levels of plant capacity and under different assumptions of sulfuric acid availability. A plant with a capacity of 217 i000 tpy of SSP based on local sulfuric acid production from imported sulfur was recommended as part of the optimum project configuration” (World Bank – ‘PROJECT COMPLETION REPORT UGANDA – PHOSPHATE ENGINEERING PROJECT (CREDIT 1228-UG)’ (13.06.1989).

Uganda Investment Authority in 2016:

Nilefos Limited, a local company, has acquired an Retention Licence for the Sukulu deposit. The company is seeking for joint venture partners to develop the mines and manufacture phosphate fertilizers and other by-products” (UIA – ‘Background to the Mineral Sector’ 07.12.2016).

IGG 2014:

According to the IGG report, Frontier, which counts former Commissioner Joshua Tuhumwire among its senior management, sent two of its staff to file an application for an exploration licence at the DGSM on 26 June 2013. According to the IGG report staff turned them away allegedly citing an instruction from the Commissioner Edwards Katto not to accept any applications for the Sukulu project. They complained to the IGG about the process. As a result the IGG published a number of concerns relating to Guangzhou’s successful application (through its subsidiary Hui Neng)” (…) “According to the Mining Cadastre the Guangzhou exploration licence was applied for on the 24 June 2013 and granted on the 1st of August 2013. Their mining lease was granted on the 29 October 2014. 198 In December 2014, after Guangzhou had received its licences Edwards Katto’s daughter was sent an invite for her to visit Guangzhou’s headquarters, with accommodation at their expense. Nilefos also raised concerns in court that the legal firm, ABMAK, is headed by the son of the then Permanent Secretary to the Ministry of Energy and Mineral Development – Henry Kaliisa which it considered to be a conflict of interest” (Global Witness – ‘Under-Mined’ June 2017).

We can see the hands of Minister of Energy Muloni and others, who clearly didn’t follow protocol on the quest of getting license for the Chinese Mining Corporation, as they differed and moved away from the prospects of a local mining corporation Nilefos, who had been there for a long and even made a feasibility study in 2010 for their operation. Certainly, the Ministry knew about this. But the backroom arrangement was so, especially considering the Ministry was meeting the Chinese, while having licensed to Nilefos. That was known in 2013, as they wrote it on the UIA pages in 2016. Nilefos still had it, who knows if the Chinese had to cough up monies to payout the Nilefos. Because that is the backroom deals we don’t know at this point and who in the Ministry who are beneficiary of the deal that has been done.

When the IGG is not allowed to publish a report on the transactions and licensing of the Sukulu Hills and the plant itself. You know something fishy is going on. There are something up and it isn’t all positive. As well, as how the local has been taken care of, as their houses and plots has been evicted because of the building of the plan.

Like the stories like these:

In December 2014, the government signed a deal with Guangzhou Dongsong Energy Group Ltd, a Chinese company, to develop phosphates in Sukulu, Tororo District. A total of 4,800 people are expected to be displaced by the project. Affected persons claim they did not understand the terms of the surface land rights lease agreements and were duped by ‘middlemen’ to sign them. General Comment No 24 should clearly indicate the State obligation to ensure free prior and informed consent principles and access to information that is in the hands of both the state and business entities” (UCCA – ‘Comments on the draft General Comment No. 24 on State Obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities’ 2016).

As seen by the IGG report and also by the UCCA. There been double-dealing of the license and not by protocol or righteous compensation of the ones living on the land. The Sukulu Plant could have been a positive development and something hopeful. Instead, by looking into it. There are a lot of shadiness going on and its not a good look. This is not a significant story when concerning this President and his administration. However, it shows how personalities and their drive, counters legal justification and finding a common ground. They are land-grabbing and essentially also overpowering the ones already planning to extract the minerals here. This has been done deliberate and with one intent.

The Chinese got the nugget and got the opportunity. The IGG report, which has been kept a secret shows so and the Global Witness is showing it. The President surely has put his stakes into this and therefore, been at the opening in 2014 and now today in 2018. He has clearly had his eyes on this and now was the time. Peace.

EFF Rejects the Mining Charter (28.09.2018)

UNOC Signs Memorandum of Understanding With CNOOC to Start a Partnership in Exploration in the Albertine Graben (05.09.2018)

President Musveni letter to Minister Matia Kasaija: “Delays in Clearing Imported Machinery By M/S Guangzhou Dongsong Energy Group (U) Co. Ltd” (14.08.2018)

South Sudan: Press Statement on Total to Exit South Sudan Petroleum License Talks (25.07.2018)

Kenya Power Statement on the summons of Senior Management by the DCI following orders by the DPP (16.07.2018)

Kakira Sugar Limited addressing farmers strike (02.07.2018)

Bitter-Sweet Sugar: Cartels total control and inaction of Jubilee – Contaminated imports for profits!

We can wonder and think, who in their right mind orders contaminated agricultural products, rebrand it and sell it on the open with a clear conscious. That is what should bugle us right now. That the Kenyan Authorities together with the Sugar Cartels are accepting this and profiting on it. If they hadn’t, they wouldn’t have ordered, imported and tried to sell it on the market to the consumers. That is what is up and happen as the minor stops of it. The people should be worried about the authorities and what they are exposed too on the daily basis. When they cannot even trust the white sugar they are consuming.

The Kenyan people should worry, that the illegal imports through Kismaayo of Somalia, the illegal cartels of Mombasa and other places are highly-connected has pocketed key figures of industry, ports and in the ministries. If it wasn’t so, they would have had more trouble with the law. They wouldn’t just take a load of contaminated sugar, they would have ceased more and banned this trade. However, the government are doing little except tough talk. Even Cabinet Secretary Fred Matiang’i is supposed to die over this, but he will not stand-by his side-dish. So I doubt it.

It is like the Jubilee knows about the ill they are getting in, thinking of the profits and of the friendly owners of the millers. Without thinking about the citizens who possible consuming it and how it might hurt them. If it is contaminated, it might damage the body and even cause fatal ills for someone. Then someone dies over something as petty as illegal and deadly sugar. Has that even been considered? Wouldn’t that been an avoidable tragedy?

That the government, the agencies and the authorities in general haven’t delivered is obvious, while this is not only hurting the average citizen. Who could be worried about going to the market and supermarket to pick a kilo of sugar. But also the farmers who produce for the millers. They don’t know if the millers and the authorities is helping to sell second-level or third-level products from afar. While rebranding it with their labels, like the ones that comes from the local producers. Then the public will loose trust with the millers who makes this sugar.

This here is the proof of how not to run, how not to delegate and not to use the oversight role as government, as they are misusing power, being in bed with the cartels and not giving a fig about the population. Because if they know they are illegally importing through Mombasa and Kismaayo, the authorities should stop it and get rid of it. Not let it go, let it be rebranded and made ready for the market. Because then the suppliers, the supermarkets and the consumers all loose on it. Only the Sugar Cartels and the Importers earns on it.

They are spiking, they are playing and coming with a dangerous product that shouldn’t be consumed by people. It should be used for matters, if not just confiscated and destroyed at arrival. Than ask for reparation of damages and possible breaches of contract, as they we’re not given edible sugar. But dangerous ones, that shouldn’t be produced in the first place. Peace.

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