Yemen Terminates Saleh-era Dubai Ports World Contract

Written by Ali Saeed
Thursday, August 30, 2012

[Sana’a] Yemenis rejoiced this week with word that the contract with Dubai Ports World (DPW) to operate the Port of Aden had been terminated. The contract was one of the remaining links to the thirty-plus-year reign of former President Ali Abdullah Saleh, and a reminder of how business was transacted during Saleh’s reign. Secretly signed by officials of the regime in 2008, the agreement to operate the Aden port was later attacked for depriving Yemen of significant financial resources by virtue of providing the UAE-based company with a 100-year lease on terms disadvantageous to the state that nevertheless went unfulfilled.

On Saturday, Transportation Minister Dr. Waed Batheeb ordered The Gulf of Aden Ports Corporation, a governmental agency under the aegis of the transportation ministry, to end the contract.

For Batheeb, who represents the Yemeni Socialist Party in the National Unity Government which was formed after Saleh was removed from office in 2011, it was the end of a long quest that began before the regime-change. Since last February, Batheeb survived three assassination attempts, the most recent of which came on the day the contract termination was announced.

According to officials of Yemen’s Ministry of Transportation, the actual cause for ending the contract that under DPW’s tenure, Aden’s terminals -- which the company was supposed to be developing -- deteriorated instead. An official at the ministry who asked not to be identified because he was not authorized to comment to media told The Media Line that, “the port used to receive around 200,000 tankers every year, but since DPW took charge, this number decreased to 165,000 tankers."

He added that the transportation minister attempted to solve the problem cordially, traveling to Dubai last February to meet with DPW officials. But he reported that the company “showed no response.”

A report released in July by the parliament’s Transportation and Telecommunication Committee described the contract with DPW as being more political than economic. It accused the company of weakening the operations of Aden’s terminals and not abiding to the terms of the contract. One example cited was DPW’s failure to expand the dock at the port to a length of 100 meters and a depth of 18-meters as it had agreed to do.

Expressing the thoughts of most Yemenis, Mostfat Nasr, an economist, told The Media Line that, “Terminating the contract with DPW is a good step.” But he admonished that, “from now, it is the responsibility of the government to restore the port to its normal place."

That “place” figures prominently in the nation’s post-Saleh socio-economic realities. The new Yemeni government sees improving the economy as being a key to creating stability in the aftermath of the uprising that ultimately ended Saleh’s rule. With unemployment at more than forty-per cent, the new Yemeni government had hoped the port, properly managed, could produce 10,000 jobs for Yemeni workers.

The port of Aden has strong potential for producing revenue on a large scale according to Dr. Mohamed Jurban, professor of economics at the University of Sana’a. He told The Media Line that its strategic location, only miles from the Strait of Bab Al-Mandeb, connecting the Red Sea to the Gulf of Aden, makes it a key route for tankers and ships going to and from south Asia and Europe. The strait is a chokepoint between the Horn of Africa and the Middle East, and a principle link between the Mediterranean Sea and Indian Ocean.

“When tankers cross the Strait of Bab Al-Mandeb, and they are in need for gas charging or regular maintenance, it is better for them to do this service in Aden’s terminals than sailing thousands of kilometers to have this service performed in Dubai or Djibouti where the weather there is not good as Aden,” Prof. Jurban explained. But, he cautioned that, “There must be a good administration to be capable of attracting the tankers that pass through the strait.”

Yemeni officials believe improvement in the situation at the Aden port will also go a long way toward convincing the international community to extend financial assistance. Next month, a conference of donor nations including the five permanent members of the United Nations Security Council and the Gulf States is scheduled to take place.

Popular support for the strategy was confirmed by 57-year old Ahmed Nasser, who predicted that, “We have our resources and we will not be in need for such donor conferences if our resources are managed efficiently with no corruption.”

It is still unclear whether the Yemeni government will take over operations at the Aden port or will seek a replacement for DPW. But either way, the process must reflect “competent management by the government “or tendering it in competition in a transparent way,” in the opinion of Nasr.

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