Cablegate: Cote D'ivoire's Ports Plan Ambitious Expansion As Political

DE RUEHAB #0037/01 0161600
R 161600Z JAN 08





E.O. 12598: N/A

REF: Ouagadougou 1079 (2007)

1. (SBU) SUMMARY. The Port of Abidjan is West Africa's largest
deep-water port, and the second largest port on the continent.
According to Maersk officials, it is also one of the more efficient
ports in the world. Cote d'Ivoire's second port, San Pedro, exports
10 percent of the country's export volume, but over 17 percent of
the export value, due to its importance in cocoa exports. While the
Port of Abidjan is still recovering from the toxic waste scandal of
2006 and several years of political instability in Cote d'Ivoire,
overall traffic has continued to steadily increase during the years
of the political crisis and expansions are underway. Both ports
have ambitious expansion plans that are dependent on large-scale
outside financing and which is not a sure bet. END SUMMARY.

Exports Slowly on the Rise
2. (U) Overall cargo traffic through the Port of Abidjan was up 1
percent to 18.8 million tons in 2006, up from 17.1 million tons in
2001, the last full year before the outbreak of civil hostilities in
August, 2002. 45 percent of the increase was due to a solid rise in
exports of oil products (Cote d'Ivoire imports and export oil and
petroleum products, but production at a large Ivorian oil field
recently came on stream, boosting oil exports). Coffee and cocoa
still represent the largest exported commodities, with a total of
almost 30 percent of all of the exports of the Port of Abidjan.

3. (U) As of 2006, the Port of San Pedro handled 1.2 million tons
annually, and it is responsible for over 70 percent of the country's
cocoa exports. San Pedro has seen its overall volume fall from 1.4
million tons -in 2000, largely due to a fall in export volume.
Officials of the Port of San Pedro told Emboff that rampant illegal
transshipment through Ghana of cocoa in order to avoid high Ivorian
taxes and illegal road levies and to benefit from Ghana's higher
prices have caused up to 200,000 tons of cocoa traffic in 2005 and
2006 to be lost to the Port of San Pedro.

Abidjan's Port: Integrating the Region's Economies
4. (U) Since the Ouagadougou Political Agreement was signed on
March 4, 2007, Cote d'Ivoire and its ports have looked to
neighboring landlocked countries to revive and boost
trans-shipments. Over 97 percent of goods transshipped through the
Port of Abidjan come from Burkina Faso, Mali, and Niger, and consist
mainly of rice, fertilizer, chemicals, cotton, and oil products. In
July 2007, the port of Abidjan chose a Burkinabe national to be its
representative in Burkina Faso. The Port hopes to work with its
Burkinabe partners to improve infrastructure to allow more goods to
pass through Cote d'Ivoire from Burkina, allowing for the creation
of a more integrated sub-region. During recent trips to northern
Cote d'Ivoire, Ivorian president Laurent Gbagbo has called on
businesses in Burkina, Mali and Niger to use Cote d'Ivoire rather
that the ports in Ghana, Benin and Togo. As reported by Embassy
Ouagadougou (reftel), Ivorian Prime Minister Soro recently brokered
a deal for a caravan of trucks carrying certified organic cotton to
pass through northern Cote d'Ivoire unmolested by pervasive illegal
checkpoints run by various military formations en route to the Port
of Abidjan. Transshipment statistics show a strong return to
pre-crisis levels for the Port of Abidjan: after plummeting more
than 80 percent from 2002 to 2003, transshipment volumes in 2006
were only 20 percent lower than those from 2002.

Port of Abidjan's High Shipping Prices
5. (U) Abidjan's port has some of the most expensive costs of
shipping in all of Africa. Maersk's regional chief executive said
that the Port of Abidjan's shipping fees are two to two and a half
times higher than competing ports in Lome, Cotonou, Dakar, and Tema
(Ghana). The Port of Abidjan justifies these higher rates through
its efficiency - its infrastructure is extensive and robust, is
capable of handling a number of deep-draft, large vessels, and Cote
d'Ivoire's road network (despite degradation over the past five
years and under-investment in maintenance) has some of the best
infrastructure in the region, allowing for much more efficient
combination land-water shipment involving neighboring landlocked

6. (U) Many shipping companies consider the Port of Abidjan as the
most efficient in Africa, even more so than those in South Africa,
Morocco, Algeria, and Egypt. Maersk even claims Abidjan's port is
more efficient than a number of southern European ports. However,
as noted above, these efficiencies don't translate into lower costs.

ABIDJAN 00000037 002.2 OF 003

Port of Abidjan officials believe (and market performance largely
bears out) that their comparative advantage surpasses other
countries in the region, thus justifying the higher costs.

Key Players
7. (SBU) The main actors involved in cargo traffic through Cote
d'Ivoire's ports remain Danish-owned MAERSK Corporation and French
SDV-SAGA. MAERSK retains 30 percent of the whole Abidjan shipping
market. Safemarine, a MAERSK subsidiary, specializes in the Abidjan
- New York traffic, and dominates Cote d'Ivoire-U.S. shipments of
cocoa and timber. SDV-SAGA and Maersk together own the Port of
Abidjan's most modernized pier terminal, and together could,
according to Maersk's regional representative, operate a scanner in
order to comply with new U.S. scanning requirements, due to come on
line in 2012.

8. (SBU) SDV-SAGA handles more than 30 percent of the Port of
Abidjan's traffic. They are willing to pay the higher prices in
anticipation of benefits they expect to receive commensurate with
the port's planned modernization and increased capacity.

9. (SBU) While traffic in and out of African ports has mainly been
intercontinental, Maersk is actively working on a commercial plan to
engage the intra-African shipping market with smaller container
ships. Maersk reports that a potential challenge to this new
approach is the growing demand for empty containers in Asia. The
international market is centered on sending empty containers to be
loaded with Asian exports headed to Europe and North America. The
resulting global shortage of containers has contributed to the
increase in shipping prices in Africa.

10. (SBU) Maersk made a recent proposal to the Port of Abidjan
that would increase the company's shipping volume in and out of the
port in exchange for lower fees. In theory, port revenue would
remain steady - if not increase - because of the additional traffic.
However, according to Port authorities, the Port of Abidjan remains
hesitant to accept the offer and negotiations are ongoing.

Port Expansion
11. (SBU) The Port of Abidjan has global ambitions to be one of
the world's leading ports. It plans to expand the port area to
encompass a largely vacant island adjacent to Abidjan while also
increasing its capacity through the associated construction of new
quays, warehouses and roads. Future projects include the deepening
of the port's main canal to accommodate even deeper draft, bigger
ships. The estimated overall cost of the port's expansion project
is $247 million. Port of Abidjan Director General Marcel Gossio
(who was accused of lassitude during the 2006 toxic waste scandal)
has recently been active courting foreign investors during trips to
Europe to finance the expansion plans, but to date, Embassy has not
seen concrete investment announcements.

12. (SBU) The Port of Abidjan is courting a slew of new investors
to support new economic activity to be associated with the port
expansion. Recently a Chinese delegation, led by the company COFCO
- the largest oils and food importer and exporter in China - was
recently in Abidjan to discuss a partnership plan with the port. In
September 2007, two U.S. companies announced preliminary plans to
invest USD 1.4 billion to build a new refinery on an island near the
Port of Abidjan in the context of the planned expansion. To date,
however, Embassy has not seen follow-up activity on the refinery

13. (SBU) The Port of San Pedro has equally ambitious plans for
expansion. Emboff attended the December 2007 ceremony marking the
35th anniversary of the founding of the Port. At the speech
commemorating the ceremony, the Port Director, Desire Diallo,
outlined a plan to transform the facility into a major nickel and
iron ore export platform for mines the government hopes private
investors will establish in western Cote d'Ivoire and eastern
Liberia and Guinea. Diallo also called for Cote d'Ivoire's
neighbors to look to San Pedro for transshipment, and asked
President Gbagbo (in attendance) for help in sourcing the capital
needed to upgrade the road network serving San Pedro to make the
plan viable. Several well-placed sources in the shipping industry
indicated that actual expansion of the Port of San Pedro would be a
simple, low-cost affair (as low as USD 60 million), using
breakwaters to segment adjacent deep-water into usable shelter, and
that financing would be easy to find should additional regional
demand growth be evident. However, President Gbagbo, in his own
address at the anniversary celebration, declined to offer funding

ABIDJAN 00000037 003 OF 003

for the 30-40 million in upgrades the region's road network urgently
needs to deliver such increased volume to the port, and pointedly
suggested that the EU, whose top representative in country was
present, provide financing for the road network in the form of
development assistance.

14. (SBU) COMMENT. As the Ouagadougou Political Agreement
continues its uneven progress towards ending Cote d'Ivoire's
political crisis, the Ports of Abidjan and San Pedro will likely see
continued, gradual expansion of volume and additional interest from
outside investors. Major expansion and modernization of the ports'
facilities, however, will probably depend on the substantial
capitalization that will come with the definitive cessation of the
political crisis (probably through successful elections) and
significant investments in the country's road network that would
make the investments viable. Continued prosperity in Cote
d'Ivoire's port sector could be a major economic boon to regional
economic integration as Sahelian industries develop and the
trans-shipment of goods continues to rise. END COMMENT.


© Scoop Media

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