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Cablegate: Port Sudan As Potential Logistical Solution for Regional

VZCZCXRO8165
OO RUEHROV RUEHTRO
DE RUEHKH #1474/01 3641454
ZNR UUUUU ZZH
O 301454Z DEC 09
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4967
INFO RUCNIAD/IGAD COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RHMFISS/CJTF HOA

UNCLAS SECTION 01 OF 03 KHARTOUM 001474

SIPDIS

NSC FOR MGAVIN, LETIM
DEPT PLS PASS USAID FOR AFR/SUDAN
ADDIS ABABA ALSO FOR USAU
GENEVA FOR NKYLOH
UN ROME FOR HSPANOS
NEW YORK FOR DMERCADO

E.O. 12958: N/A
TAGS: EAID PREF PGOV PHUM SOCI SMIG UN SU
SUBJECT: PORT SUDAN AS POTENTIAL LOGISTICAL SOLUTION FOR REGIONAL
FOOD AID NEEDS

1. (U) Summary: There is no recent history of vessels with USG
humanitarian aid cargo waiting for berthing space due to port
congestion outside of Port Sudan. The same can-not be said for
Djibouti port to the south. In order to avoid delays of emergency
food aid delivery to Ethiopia due to port congestion in Djibouti,
the UN World Food Program (WFP) is working to shift a portion of the
Ethiopia food aid tonnage to Port Sudan without disrupting current
Sudan food aid operations. At the end of November, Port Sudan
received the third vessel of food aid destined for Ethiopia since
the flexible operation began in April. The vessel transported 27,000
metric tons (MT) of bulk wheat for Ethiopia and 5,000 MT for WFP
Sudan. The governments of Sudan and Ethiopia are aware and
supportive of these cross-border operations. As significant as these
ad-hoc operations are in helping alleviate this most recent instance
of Djibouti port congestion, it is important to highlight the
current user-friendly operational approach within the port that
could make Port Sudan part of the food aid logistical solution for
the USG. As long as WFP Ethiopia shipments are conducted on a
case-by-case, emergency basis, and particularly for bulk cargoes, no
negative impact is anticipated on the ongoing WFP Sudan program. End
summary.

-----------------------------
WFP Port Sudan Relationships,
Procedures Advantageous
---------------------------

2. (U) Port Sudan has a large capacity, with a comfortable operating
cushion built into the WFP Sudan port operation. Port Sudan
comprises three different units: the Green Port has a quayside that
can fit up to five vessels, depending on their individual/collective
length overall; the North Port, which can accommodate two vessels
simultaneously; and the South Gate container port, which can berth
two container vessels at the same time. WFP has a favored working
relationship with the private-sector SAYGA Flour Mills silo, which
has a 110,000 MT silo capacity within the port, as well as an
additional facility just off-port that can hold another 35,000 MT.
The privately-owned DAL conglomerate owns SAYGA, and there is no
shortage of capital investment. Another grain silo is currently
well under construction and now leased by SAYGA (also within the
port) with an anticipated additional 100,000 MT grain silo storage
capacity. WFP has convenient, off-port private warehousing capacity
of 14 to 17 purpose-built permanent facilities for 200,000 MT rented
from Immarat Company and the flexibility to expand these rentals as
required. Half of these facilities are leased in six-month
tranches, while the other half are on shorter three-month leases to
ensure flexibility.

3. (U) While WFP can utilize these warehouses for food aid storage
depending on volume of food aid arriving at port, WFP operates on a
"direct delivery" mindset in order to avoid extra handling costs in
Port Sudan warehouses. WFP currently utilizes 12 short-listed
trucking companies that can provide 100 percent contracted
long-haul, direct-delivery capability to WFP hubs in El Obeid,
Khartoum, Kosti, and Nyala. With this strong Sudanese private sector
long-haul trucking capacity, WFP does not have to maintain its own
trucking fleet. In addition, WFP has persisted in developing the
rail delivery modality collaboratively with the Sudan Railways
Corporation and utilizes rail for direct delivery of 1,200 MT/vessel
to Nyala, South Darfur.

4. (U) All chartered vessels arrive with a charter party contract
originating from WFP Rome, and a discharge rate is already
stipulated. (Note: The discharge rate is the amount of metric
tonnage that a ship's owners have contracted to discharge from the
vessel each full day. End Note.) WFP Port Sudan has a history of
"early dispatch," which indicates that discharge has finished in
advance of the charter party contracted timeframe. The WFP port bulk
discharge operation in Port Sudan is very flexible, reacting
professionally to the discharge limitations, strengths, or other
characteristics of the vessel chartered. For example, WFP has a
contract with the SAGYA silo to discharge at an average rate of
8,500 MT per day if the vessel is transporting more than 30,000 MT,
and a discharge rate of 6,000 MT is expected if the vessel carries
less than 30,000 MT. If conventional discharge methods are required,
then WFP's contract with Portserv is for a rate of 2,800 MT per day.
The uplift ex-SAYGA Silo output rate for stored grain bagged for
inland delivery is 2,000 MT/day.

5. (U) The movement of food commodities from the shipping vessel to
trucks or warehouses results in significant container discharge at
the South Gate container port. WFP Port Sudan has received more than
1,500 containers over the past calendar year up to the end of

KHARTOUM 00001474 002 OF 003


October. The WFP container discharge system includes four separate
operations: 1) identification and marshalling of containers at
quayside in South Gate, 2) shunting of containers from the South
Gate quayside marshalling area to the WFP container yard at Damadama
using Port Authority local transport, 3) positioning of WFP
containers for stripping and management of empty containers, and 4)
determination of direct delivery to upcountry destination or
delivery to local WFP warehouse and reporting. WFP can perform
60-100 container movements during the third shift of the day.
Shunting then begins in the morning's first shift to the WFP
container yard in Damadama. WFP maintains two Hyster 44s container
handlers to facilitate all internal WFP container yard movements.
Special acknowledgement should be made to the Port Authority for
providing roughly 100,000 square meters of open, level container
terminal space within the port confines at Damadama to WFP Port
Sudan free of charge for container stripping operations. This
in-kind donation by the Port Authority to WFP is illustrative of the
close working relationship that WFP has been able to develop over
time with the Port Authority.

------------------------------------------
Port Sudan as a Safety-Valve for Ethiopia
------------------------------------------

6. (U) Sudanese customs officials consider WFP Ethiopia-bound
shipments as transit cargo. Two bulk grain discharge shipments to
Ethiopia--24,255MT and 24,501MT respectively--have been successfully
conducted during the past year. WFP has negotiated a 50 percent
reduction in the standard port fees per metric ton for this
humanitarian transit cargo to Ethiopia. WFP is only required to pay
5-6 SDG/MT while the cargo is in transit rather than the current 14
SDG/MT for WFP Sudan cargo. The Government of the Federal Democratic
Republic of Ethiopia (GFDRE) Minister of Agriculture and the WFP
Ethiopia Head of Logistics visited Port Sudan three months ago to
review the possibilities of transit cargoes.

7. (U) The use of Port Sudan for delivery of WFP food aid into
Ethiopia through Gedaref/Metama is officially supported by both the
Sudanese and Ethiopian governments, and WFP continues to work with
both governments to resolve remaining logistical challenges,
including the below-mentioned examples, for future transit cargo
shipments. As Ethiopia is a land-locked country, the strategic
importance of cultivating a positive relationship with the
Government of Sudan (GOS) and gaining access to the use of Port
Sudan cannot be overstated. The food aid program in Ethiopia is
consistently one of the largest programs for both USAID and WFP each
year, and the problems with the Djibouti port capacity are
longstanding. With the improvement of the relationship between GDFRE
and GOS, Port Sudan is emerging as a more seriously viable
alternative.

a) Customs Issues/Fees: From Port Sudan to Gedaref, the transit
cargo remains under customs bond. During the first movement of more
than 24,000 MT of food aid destined for Ethiopia, individual trucks
could not be processed at Gedaref customs yard as Sudanese customs
officials had to wait for the larger numbers of the convoy to
arrive. If one truck had broken down on the road from Port Sudan, it
would have delayed the entire convoy's movement. The WFP
Ethiopia-contracted Sudanese transporter, Rayba, has now arranged
that customs staff be assigned specifically to the Ethiopia
transshipment operation at Gedaref. WFP Ethiopia is working closely
with the GFDRE through their channels with the Sudanese government
and is negotiating the complete waiver of the 15 percent VAT on
transporter's invoices. This waiver is expected soon.

b) Damage/Infestation within Sudan: At Gedaref, the transit cargo
remains under customs control. If infestation is found, a separate
customs-bonded warehouse has to then be established to separate and
treat that cargo. Supervision fees must be paid to customs for that
additional warehousing. In Gedaref, state authorities have
established local fees 6 SDG/MT paid for any tonnage stored in
Gedaref. During the first shipment bound for Ethiopia, WFP informed
Gedaref authorities that the cargo was in transit to Ethiopia and
asked for the fees to be waived. While authorities originally
rejected the request, the cargo was eventually dispatched without
paying these fees.

c) Damage Resulting in GDFRE Rejection: Another example of the
details that have to be worked out could be seen in the second
shipment. Wet bags rejected by the Ethiopian EFSRA warehouse in
Woreta were sent back to the Sudan border where Sudanese customs
refused to allow entry of the trucks. WFP advised Woreta not to send
any rejected cargo back to Sudan as this raises many complications

KHARTOUM 00001474 003 OF 003


with authorities.

----------------------------------------
Logistical, Customs Challenges Lessening
----------------------------------------

8. (U) The past two transit difficulties were in April-May 2009 and
again in July-August 2009. Both instances were wheat cargoes with
non-USG food aid. Each cargo of approximately 24,000 MT required 25
to 30 convoys traveling 600 km from Port Sudan to Gedaref, 150 km
from Gedaref to Metama, 40 km from Metama to Shehady, and then a
final 100 km from Shehady for final delivery to Woreta, Ethiopia.
The first transit delivery required intensive customs negotiations
and explanations. The second instance required considerably less
money and less administrative time invested. The first instance took
about one month to complete. The second instance took roughly 45
days, but the delays were attributed to the rainy season.

--------------------------------------
Port Sudan Capacity, Smooth Operations
Strategic for Horn of Africa
--------------------------------------

9. (U) As long as WFP Ethiopia shipments are conducted on a
case-by-case, emergency basis and particularly for bulk cargoes, no
negative impact is anticipated on the ongoing WFP Sudan program, due
to the already established procedures in place and large capacity at
Port Sudan. Port Sudan has a sustainable bulk grain discharge rate
at quayside effectively allowing a vessel's discharge at Port Sudan
to be completed in a matter of hours rather than the days/weeks seen
at other ports in the region. Port Sudan has no history of vessel
laytime at anchorage and no resulting demurrage charges. SAYGA's
food-quality silo capacity inside the port is expanding. Port Sudan
has a demonstrated off-take capability and enjoys strategic
proximity to the two largest, by metric tonnage, WFP country
programs (Sudan and Ethiopia).
ASQUINO

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