ETHOPIA LIBERALIZES SHIPPING SERVICES

The Ethiopian Maritime Affairs Authority (EMAA) has proposed a bill that seeks to liberalise the country’s shipping industry where currently the state owned Ethiopian Shipping Lines (ESA) is the sole operator. Under the proposed bill, interested investors can set up multimodal transport operators (MTOS) with a minimum capital base of 10Million Br, would be allowed to float shipping companies.

MTOs are persons or companies that conclude a multimodal transport contract with the consignor or a carrier for the former to undertake all responsibilities as far as transporting goods via various modes. The MTO acts as the principal and not as an agent, even though it can subcontract part of its responsibilities to another party.

The potential operators may or may not operate their own vessels; they can get a licence if they present the 10 million Br capital requirement, with 25pc deposited in a blocked account in the name of the company, according to the draft. It also requires that the main office of the company be located in Ethiopia. They must have at least two agents in at least two foreign countries, however the number of agents is expected to grow to five.

Director General of EMAA, Mekonnen Abera, explained that one of the cardinal objectives of the proposed law is to promote competition in the market in which the ESL is operating as a monopoly at the moment."It invites the private sector to engage in such activities, which, in the end, will be a means to achieve efficiency. The other reason is to have other MTOs fill the gap in the transport of export goods, which ESL currently does not cover as much as imports”, Mekonnen said.

The MTOs are expected to subcontract their inbound cargo (imports) to ESL, unless a waiver is given by the state owned monopoly. Vessel and non-vessel owning operators established by foreign subjects are prohibited under the proposed law from rendering service for land haulage in the transit corridor, which is only reserved for Ethiopian subjects, directly by themselves. The MTO acts in the capacity of a principal and not as an agent as is the case with forwarders as well as for transit trade.

The EMAA expects the proposed law to encourage local companies to become MTOs and allow international MTOs to enter the market once the local operators have become stable and competitive. The Agency has proposed that the bill should regulate all international multimodal contracts in which the place for taking charge of the goods or the place of delivery of the goods is located in Ethiopia.