EIH Invests Big in Djibouti’s New Mega Oil Terminal

Posted on : Tuesday , 15th November 2022

The recently formed sovereign wealth fund (SWF), Ethiopian Investment Holdings (EIH), crosses the border to hold stake in a lucrative mega logistics facility in Djibouti.

As indicated by the information that Capital obtained, the 1st overseas investment venture for the SWF will come through a secured 30% stake in an ultra-modern oil port facility, which can comfortably accommodate the latest generation vessels.

The investment holding is said to take the share through the Ethiopian Petroleum Supply Enterprise (EPSE), which is one of the 27 mammoth public enterprises controlled by the SWF.

It is recalled that in May this year, Mamo Mihretu, CEO of the sovereign wealth fund, Ethiopian Investment Holdings (EIH), and Aboubaker Omar Hadi, chairman of Djibouti Ports and Free Zones Authority (DPFZA) – that owns Great Horn Investment Holding, (Djibouti’s SWF formed recently), signed a MoU to explore opportunities on the area of oil storage facility.

The MoU signage comes at the back of years of extensive discussions centered on the joint development of an oil terminal, since the current facility, Horizon Djibouti Terminal (HDT), is falling behind with regards to accommodating the growing petroleum demand needs of Ethiopia.

For instance, late 2017, the 2 countries Transport Ministers engaged in comprehensive discussions on the construction of a new oil terminal to meet the growing demand of Ethiopia.

It’s now clear that the Ethiopian SWF is going to take a stake in Damerjog Liquid Bulk Port (DLBP), which is part of the USD 4 billion project of Djibouti Damerjog Industrial Park (DDIP).

As Omar Hadi informs Capital, a new company will be formed including Djiboutian and Ethiopian sides who will take ownership of the DLBP, “EIH through the enterprise will take 30 % in equity partnership.”

Mamo on his end said that EIH is an Ethiopian government strategic investment arm, stating, “It is creating value and investment opportunities within Ethiopia and beyond.” He elaborated that the investment holding has primary focus areas to which the logistics sector is among the priority list, “It is vital to boost regional integration with neighbouring countries including Djibouti.”

“We also have an objective of insuring Ethiopia’s energy sector. Cognizant of this, we are exploring the potential of co-investing in the oil terminal in Djibouti,” the CEO told Capital adding, “we are in advanced conversations with the Djibouti Port Authority.”

However, he declined to give further details since there are pending issues.

The DLBP project which is officially being constructed by SOMAGEC, a Moroccan firm specializing in the construction of port infrastructure, will consume USD 350 million by the time of its inauguration in June 2023.

Regarding the project, Omar Hadi said that the new facility will be able to accommodate Ethiopia’s demand for the coming years as its new facility is colossal in comparison to the HDT which was established in 2003, commencing operations in 2005.

“The concepts are not even similar as the oldest oil terminal is operating in a single jetty and one terminal, whilst the new one will have different terminals, while using one jetty. Regarding capacity, the new one will have 13 million tons,” the Chairman explained.

To place this into perspective, HDT’s facility has a capacity of 4.5 million tons per annum.

The DLBP structure consists of an offshore jetty that is connected to onshore storage facilities. This will serve multiple end users, enabling them to load and unload a wide variety of products to and from inland storage facilities. The jetty is located around 3km from land, with a causeway that provides access for vehicles and pipeline services. It is designed for the berthing of two ships – one capable of accommodating vessels of up to 100,000 DWT and the second for vessels up to 30,000 DWT.