Ethiopia and Sudan have agreed on a deal allowing the Horn of Africa nation to take a stake in Sudan’s largest sea gateway port of Port Sudan, officials said on Thursday.
Several countries have ramped up investments in seaports along the Red Sea and East Africa’s coast as they vie for influence in a strategic corridor that is vital for shipping lanes and oil routes.
The deal between Addis Ababa and Sudan was reached in Khartoum on Thursday at a meeting between Ethiopia’s Prime Minister Abiy Ahmed and Sudan’s President Omar Hassan al-Bashir.
"The leaders of both countries agreed to develop Port Sudan together," said Meles Alem, spokesman for Ethiopia’s Foreign Ministry.
"This deal entails that Ethiopia will be a shareholder of the port as well," he told Reuters.
No financial details of the agreement were disclosed.
Another official said that the agreement would enable Ethiopia to have a say in the level of port handling fees.
The deal comes two days after Ethiopia reached a similar arrangement over the Port of Djibouti, Djibouti’s main gateway for trade.
"Access to a diversified range of ports is a strategic imperative for the government of Ethiopia. That is perhaps one of its most important priorities in terms of trade and development," said Ahmed Salim, vice president at the Teneo global advisory firm.
Ethiopia’s involvement supported the financing and development of the Sudan and Djibouti ports, he added.
Djibouti had been seeking investors for its port since it terminated the concession for Dubai’s state-owned DP World to run the port in February, citing a failure to resolve a six-year contractual dispute.
The agreement with Ethiopia gave Djibouti the option of taking stakes in state-owned Ethiopian firms. The companies that it may look to invest in include Ethiopian Electric Power and Ethio Telecom - one of Africa’s last remaining telecoms monopolies.
It was not clear if Sudan’s agreement involved a similar arrangement with Ethiopia.
Djibouti’s location is of strategic value to countries such as the United States, China, Japan and former colonial power France, all of which have military bases there.
The deal with Djibouti also followed Ethiopia’s agreement to acquire a 19 percent stake in the Port of Berbera in the breakaway Somali region of Somaliland. DP World retains a 51 percent stake there, while the government holds the rest.
Ethiopia to take a stake in Sudan’s main sea gateway port