Infrastructure
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Djibouti plans new container terminal to bolster transport hub aspirations

Comments (0) Actualites, Africa, Business, Economy, Infrastructure

ABIDJAN (Reuters) – Djibouti is in talks with French shipping company CMA CGM to develop a new container terminal at an initial cost of $660 million as part of the tiny African country’s bid to expand into a sea and air transport hub for the continent.

Aboubakar Omar Hadi, chairman of the Djibouti Ports and Free Zone Authority (DPFZA), told Reuters on Tuesday that the authority hopes to award the concession in July. It was also prepared to buy out DP World’s stake in an existing container terminal to end a row with the Dubai port operator and avoid arbitration, he said.

Djibouti’s strategic location has led the United States, China, Japan and former colonial power France to build military bases there.

Its ports already serve as an entry point for cargo which is then sent by smaller vessels to ports along Africa’s eastern coast, but it is now seeking to become a sea-air transshipment hub for the entire continent.

To do this, Hadi said DPFZA was also planning to construct a $350 million airport and expand Air Djibouti’s fleet of cargo aircraft.

The new container terminal project could break ground as early as September with construction expected to take 24 months, Hadi said, speaking on the sidelines of the Africa CEO Forum in Abidjan, Ivory Coast.

“We are going to build DICT, Doraleh International Container Terminal. This is a new plan,” he said. “We are in discussions with CMA CGM.”

The port authority was not in talks with any other potential partners, he said. CMA CGM did not immediately respond to a request for comment.

Once operational, Hadi said the port terminal would boast an annual capacity of 2.4 million twenty-foot equivalent units (TEU), but subsequent expansion phases would bring that up to 4 million TEUs.

Fifteen percent of the project’s cost will be financed through equity. Of that, the DPFZA will contribute 85 percent, with its concession partner providing 15 percent. The rest will be raised via international institutions and banks.

“We are targeting trans-shipment,” Hadi said.

 

DP WORLD DISPUTE

Meanwhile, Hadi said the port authority was ready to end a dispute with DP World over its cancellation of a concession contract for another facility, the Doraleh Container Terminal, by buying out DP World’s 33 percent stake.

Djibouti ended the contract with the Dubai state-owned port operator last month, citing a failure to resolve a dispute that began in 2012.

DP World has called the move illegal and said it had begun proceedings before the London Court of International Arbitration, which last year cleared the company of all charges of misconduct over the concession.

“We are prepared to pay them their 33 percent of shares,” Hadi said. “There is no need for arbitration. We are going to buy their shares.”

 

(Reporting by Joe Bavier; Additional reporting by Gus Trompiz in Paris; Editing by Aaron Ross and Susan Fenton)

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DP World wins 30-year Congo port concession

Comments (0) Actualites, Africa, Infrastructure, Middle East

DUBAI (Reuters) – DP World said on Sunday it had won a 30-year management and development concession for a greenfield, multi-purpose port in the Democratic Republic of the Congo (DRC).

The Dubai-owned port operator will set up joint venture with the Central African country’s government to manage and invest in the Atlantic Coast’s Port of Banana, it said in a bourse statement.

An initial $350 million will be invested to construct a 600-metre quay and a 25-hectare yard extension with a container capacity of 350,000 TEUs (twenty-foot equivalent units) and 1.5 million tons for general cargo.

Congo has long looked to develop a port along its less than 50 km (30 miles) of coastline to handle larger vessels than those that can reach its existing shallow ports up the Congo River.

Construction is expected to start this year and take two years to complete. A total project cost of over $1 billion, spread over four phases, will be dependent on market demand.

DP World will control 70 percent of the joint venture with the government of the DRC retaining the remaining 30 percent, the statement said.

The award includes an option to extend the concession for an additional 20 years.

 

 

 

(Reporting by Alexander Cornwell. Editing by Jane Merriman)

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Ethiopia signs $600 million loan, grant deal with World Bank

Comments (0) Actualites, Africa, Economy, Infrastructure

ADDIS ABABA (Reuters) – The World Bank agreed a $600 million loan and grant to Ethiopia on Tuesday to fund roads and other infrastructure projects in urban areas.

The Washington-based bank said the funds would “help strengthen the capacity and performance of local urban governments, expand sustainable urban infrastructure and services, as well as promote local economic development”.

Ethiopia’s urban population is growing by 3.8 percent annually on average, one of the fastest rates in sub-Saharan Africa and presenting challenges to infrastructure, services and jobs, the bank said.

“To successfully manage urbanisation … cities are likely to require fiscal transfers for the foreseeable future. This programme will help cities to realise their revenue potential,” Abebaw Alemayehu, the World Bank’s team leader for the project, said in a statement.

The programme will also support projects in 73 towns across the country and benefit more than 6.6 million people, he said.

Under a 2015-2020 development plan, Ethiopia plans to set up less than 10,000 “rural development centres” in a bid to ease the influx of people to its capital Addis Ababa.

Earlier this month, the World Bank also approved a $375 million loan to Ethiopia to fund a national electrification project.

 

(Reporting by Aaron Maasho; Editing by Susan Fenton)

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Gabon accuses France’s Veolia of polluting amid concession dispute

Comments (0) Actualites, Africa, Business, Europe, Health, Infrastructure, Politics

LIBREVILLE (Reuters) – Gabon accused French environmental services group Veolia on Tuesday of widespread pollution at SEEG, the power and water utility it operates there, amid a growing dispute over the company’s concession.

Veolia, which has already threatened legal action after the government seized SEEG earlier this month and said it would cancel its concession, rejected the accusations.

Speaking to reporters in the capital Libreville, government spokesman Alain-Claude Bilie By Nze said an environmental inspection of power and water pumping stations discovered “nearly all” SEEG sites were contaminated by petroleum waste.

“This is a very serious situation since, at this stage, aside from the obvious environmental damage, no one knows the consequences this pollution could have had or could have on public health,” he said.

He said that on top of legal penalties of up to 500 million CFA francs ($946,110) for each polluted site, Gabon would force SEEG to shoulder the clean-up costs.

Responding to the accusations, Veolia stated that the water it distributed continued to conform to World Health Organization standards and Gabonese regulations.

“It is surprising that none of the inspections of the public authorities … ever highlighted environmental damage,” it said. “The SEEG is subject to regular audits by the Gabonese authorities, more than 10 in the last 10 years.”

Negotiations between the government and Veolia over the concession broke down in October, and authorities seized SEEG earlier this month, citing years of poor service quality.

Veolia in turn blamed the government for failing to live up to its investment obligations, and on Tuesday said the state owed SEEG over 29 billion CFA francs in consumption charges and unpaid value-added tax reimbursements.

Gabon spokesman Bilie by Nze said the government had called for an audit of its 13 billion CFA consumption bill.

He rejected accusations it had neglected SEEG and said the state had invested around 1 trillion CFA francs in the company, around three times more than Veolia.

 

($1 = 528.4800 CFA francs)

 

(Reporting by Gerauds Wilfried Obangome; Additional reporting by Laurence Frost in Paris; Writing by Joe Bavier; editing by David Evans)

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Gabon: Depressed in Economic Crisis, Government Fuels Investor Mistrust by Expropriating Veolia-SEEG

Comments (0) Africa, Economy, Featured, Infrastructure

The headquarter's of Gabon's energy and water company SEEG

The collapse of oil prices has plunged this small—and potentially wealthy—Central African state into a prolonged financial crisis and Bongo’s regime has been unable to resolve it. Gabon’s government had juste illegally seized French environmental services group Veolia’s SEEG unit and intends to terminate its contract to distribute water and electricity in the country: the latest in a larger, overarching economic and political crisis.

Gabon’s Economy: A Downward Spiral

Gabonese President Ali Bongo has known of Gabon’s suffering from a prolonged economic crisis since 2014, when a steep drop in oil prices hit the oil industry worldwide. At the time, he told French journalists: “The shock of falling oil prices is tough for Gabon”, speaking of the OPEC member state; a major oil-producing country in the Gulf of Guinea.

Production in Gabon is in decline. The recovery is slow and may not come at all. In the past five years, the oil sector accounted for 80 percent of exports, 45 percent of gross domestic product, and 60 percent of budget revenue, on average according to World Bank data.

With revenues declining and the population feeling the squeeze, Ali Bongo faces the strongest opposition in years, plus some social upheaval, including a spate of strikes in the private sector and public services. Teachers, magistrates and customs officials all demand an improvement of their working conditions and the payment of several months of wage arrears.

The budget was cut by over 5 percent in 2017 because of declining oil production and prices. Income per capita rocketed from $3,090 in 2000 to $10,410 in 2014 as oil prices shot higher. But as oil prices slid, it fell in 2015, for the first time in 15 years.

“Depleting oil revenues are pushing Gabon’s economy towards the cliff edge” said Maja Bovcon, senior Africa analyst at global risk firm Verisk Maplecroft.

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Scene of daily life along a main street of Libreville, the capital and largest city of Gabon.

As a result, and for the first time in Gabonese history, on June 19, 2017, the International Monetary Fund (IMF) approved a three-year extended arrangement (from 2017 to 2020) under the Extended Fund Facility (EFF) for Gabon for $642 million.

“The collapse of fiscal revenues from oil and manganese, which account for half of the government’s revenues, has caused significant difficulties in the public treasury,” says Yves Picard, director of the French Development Agency (AFD) in Gabon. “There was nothing left in the public purse, and the strikes multiplied in public services. Investors do not come anymore. The African Development Bank (AfDB) has provided 200 million euros and is expected to contribute 300 million by the end of the year, but the agreement with the IMF was essential. This agreement gives it three years of breathing space to wait for a rise in oil prices and not to sharply reduce deficits.”

A bad business climate, on top of widespread political instability

Gabon is also still reeling from a disputed election in August/September 2016 that turned violent in the coastal capital Libreville, harnessing anger among poor people, who say oil revenues never trickle below the Gabonese elite. Since he was first controversially elected in 2009, Ali Bongo, whose family has ruled the country of nearly 2 million since 1967, has said he will diversify the economy beyond oil into industry, mining, forestry and agriculture. He aimed to rein in spending and increase social programs, though it is unclear how much progress has been made so far.

The last Gabonese presidential election was marred by numerous inconsistencies, arrests, human rights violations and post-election violence. Bongo was initially handed victory, after surprising results in the eastern Haut-Ogooue province, but opposition leader Jean Ping called the election a sham, declared himself president and demanded a recount. The Haut-Ogooue is the native province of the Bongo family where initial results showed Ali Bongo won 95 percent of the votes on a 99.9 percent turnout.The case went to the Constitutional Court (chaired by Marie-Madeleine Mborantsuo, a close relative of the presidential family) which ruled in Bongo’s favor.

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Protesters in Libreville against Gabonese President Ali Bongo, after the 2016 presidential election.

Today, the business climate in Gabon is in particularly bad shape: endemic corruption, numerous strike actions by employees of both the Government and the private sector, unpaid wages in all sectors, an increasing number of overdue invoices, and so on.

“Gabon does not have a good reputation for doing business, but with the oil crisis, the situation has worsened: the Gabonese State shows the highest share of long overdue receivables, pushing companies like Sodexo or Veolia to engage in a power struggle, or leave the country” confides a senior executive working for a major bank in Central Africa.

Due to this atmosphere, the list of foreign firms leaving Gabon is getting longer: BNP Paribas, Bouygues, Sodexo, Shell, Panalpina, Sinopec…

The French credit insurance company Euler Hermes is worried about the consequences of “the current political turmoil in Gabon (…) Political uncertainty is not appreciated by investors, and negatively affects their confidence. Without these investors, it will be difficult for Gabon to finance the diversification of the national economy. Moreover, Foreign Direct Investment (FDI) has already decreased by 38% in 2015”.

The illegal expropriation of the French environmental services group Veolia’s SEEG unit sends a very bad message to international investors

The conflict unleashed by the Bongo’s regime against Veolia’s SEEG unit is the most recent episode of the economic uncertainty in Gabon.

“The liquidity crisis forces the Gabonese Central Bank to put in place capital controls without saying so; businesses have a hard time getting paid by the state and getting foreign currency” emphasises Stéphane Colliac, senior economist Africa at Euler Hermes.

The Gabonese State has debts due or payable to Veolia-SEEG: 62 million euros, according to the information supplied by Helman le Pas de Sécheval, secretary general of Veolia, to the Agence France Presse (AFP). At the end of 2016, Veolia-SEEG already claimed 100 million euros in arrears.

Ali Bongo SEEG Gabon Veolia

Ali Bongo inaugurates new hydraulic facilities built by Veolia-SEEG in Libreville, in 2016.

Veolia, which provides drinking water to 100 million people across the world, has been operating in Gabon since 1997 via the Société d’eau et d’électricité du Gabon (SEEG) which is a co-ownership (Veolia owns 51 percent, the Gabonese State, and others, own 49 percent).

On Friday 16th, February, Gabon’s government intended to terminate this cooperation through the Water and Energy Minister, Patrick Eyogo Edzang: “In the interest of preserving continuity and quality in the public provision of drinking water and electric energy, the Gabonese state has proceeded exceptionally to the temporary requisition of the company”.

Veolia-SEEG said it “regrets the sudden decision taken… to break the concession’s convention and the brutal use of Gabonese forces who requisitioned the enterprise”.

Several specialists in Gabon’s economy are worried about by the Government’s decision: “The concerns are legitimate. The state took a significant risk by cancelling Veolia’s contract without a new partner. In addition, the brutal method employed may seem like a foil to some investors who might have been interested. Such decisions impact the business environment and challenge the ability of the Gabonese government to meet its contractual commitments” said Mays Mouissi, a well-recognized economist from Gabon.

The brutal breach of contract with Veolia is “a very bad signal sent to potential foreign investors,” regrets Mr. Ntoutoume Ayi, an economist close to Jean Ping, the main opponent of President Ali Bongo.

Helman le Pas de Sécheval, secretary general of Veolia, shares this view: “Veolia is taking all necessary measures to enforce the law (…) This illegal expropriation and inconsistency of the Gabonese government will hurt not only Gabon but also Africa as a whole. The water and energy sectors demand vision, long-term investments and stability. This is what international investors expect”.

Gabon needs to pay attention to its international reputation and business climate. In an extreme case, foreign firms could refrain from investing, while domestic ones could flee the country for a more peaceful environment.

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Kenya raises $2 bln Eurobond but concerns over deficit linger

Comments (0) Actualites, Africa, Economy, Infrastructure, Politics

NAIROBI (Reuters) – Kenya shook off a downgrade and the loss of access to an IMF standby credit facility to raise a $2 billion dollar bond at competitive yields, but market participants said on Thursday it still needs a credible plan to tackle its fiscal deficit.

Kenya received $14 billion worth of bids. It took just $1 billion in a 10-year note with a yield of 7.25 percent, and another $1 billion in a 30-year tranche with a yield of 8.25 percent, Thomson Reuters news and market analysis service IFR reported.

“They were in line with the yield curve,” said a fixed income trader in Nairobi.

The eventual yield reflected a tightening of the initial pricing area by about 30 basis points. It was close to the comparative yields for other African sovereigns like Nigeria, the trader said.

Last week, credit ratings agency Moody’s downgraded Kenya’s debt rating to B2 from B1 while officials were in the middle of the bond roadshow abroad, angering the government.

More bad news emerged on Tuesday, after the International Monetary Fund said it had frozen Kenya’s access to a $1.5 billion standby facility last June, after failure to agree on fiscal consolidation and delay in completing a review.

“They (the government) were able to weather the knocks of the Moody’s downgrade and the IMF issue,” said Aly Khan Satchu, a Nairobi-based independent trader and analyst.

But he warned that the government needed to convince investors it has a plan to tackle the fiscal deficit.

“People are worried about debt-to-GDP ratios and they want to see a stronger language about how this will be addressed,” he said.

Kenya’s total debt is about 50 percent of GDP, up from 42 percent in 2013. It has borrowed locally and abroad to build infrastructure like a new railway line from Nairobi to the port of Mombasa.

The finance ministry has published a plan to lower its fiscal deficit to 7 percent of GDP at the end of this fiscal year in June, from 8.9 percent in 2016/17, and to less than 5 percent in three years’ time.

Satchu said it was not enough for investors. They want to see more targeted infrastructure investments that will ensure a return, and attempts to reign in a ballooning public service wage bill and other recurrent expenditure.

“We have got to walk the talk. We are not even talking the talk yet,” he said.

 

(By Duncan Miriri. Editing by Katharine Houreld and Toby Chopra)

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Eskom says rolling cuts unlikely despite coal supply fall

Comments (0) Actualites, Africa, Environment, Infrastructure

By Nqobile Dludla and Mfuneko Toyana

JOHANNESBURG (Reuters) – South African utility Eskom said on Thursday rolling power cuts are unlikely despite coal supply possibly falling below a 20-day requirement at its Hendrina power station.

On Thursday investigative news outfit AmaBhungane reported Eskom may be forced into nationwide electricity cuts after a coal mine linked to the Gupta family threatened to halt supply.

Eskom has been at the heart of allegations of illegal contracts and undue influence in awarding tenders to the Gupta family, friends of South African President Jacob Zuma.

Spokesman Khulu Phasiwe confirmed Eskom had held an emergency meeting last Friday to determine whether strategic coal stockpiles at Hendrina and other stations were sufficient after Tegeta Exploration and Resources threatened to halt supply to Hendrina.

Coal supply at Eskom’s power stations stood at 74 days’ worth in March but had fallen to 25 days’ worth at Hendrina by October and may have fallen below a 20-day requirement since, Phasiwe said.

He told Reuters the company was investigating whether supply at all its 12 power stations complied with regulations requiring at least 20 days’ worth.

South Africa had regular power cuts between 2008 and 2015, hitting key industries and knocking economic growth as demand exceeded capacity.

Quoting sources, AmaBhungane alleged that Tegeta has been exporting coal from its Optimum Coal Mine while limiting supply to Eskom.

“If it happens that for some reason they are unable to supply us with coal then clearly it means that they would have breached the contract and therefore it becomes a legal matter,” Eskom’s Phasiwe said.

A spokeswoman for Tegeta parent company Oakbay, founded by the Gupta family as its main investment vehicle in South Africa, said the company would likely comment on Friday.

The family agreed in August to sell Tegeta but the sale has not been finalised.

The Guptas are accused of using their links with the 75-year old Zuma to wield influence and win state contracts. Zuma and the family both deny any wrongdoing.

($1 = 13.6469 rand)

(Editing by Ed Stoddard and Jason Neely)

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