Fuel Stability Coming To Taiwan’s Newest Diplomatic Ally – Or Is It?

On September 2nd, exactly a week before the north African nation of Somaliland opened its official embassy to Taiwan in the Taiwanese capital, the oil tanker MT Omair docked in Berbera port to unload 14,000 metric tons of diesel into Berbera oil terminals.

According to Somaliland government officials, this is the largest shipment of fuel to ever arrive in Somaliland.

According to the Minister of Commerce, Industry and Tourism Hon. Mohamoud Hassan Saad (Saajin), the shipment of diesel belongs to Trafigura – an energy trading multinational conglomerate who will resell the shipment to the fuel traders who previously imported their supplies individually.

The Minister of Commerce Hon. Mohamoud Hassan Saad (Saajin) stated that this is another major milestone in Somaliland’s effort to attract major companies to come and invest in the country, and added that Trafigura as a company is larger than DP World.

Explaining Trafigura’s role in becoming Somaliland’s fuel supplier, the Minister of Commerce Hon. Mohamoud Hassan Saad (Saajin) stated that the company will be modernizing the existing fuel storage facility in Berbera.

The fuel market in Somaliland has been highly fragmented and subject to wild price swings and there has been an instance in the past where contaminated fuel shipment affected thousands of vehicles.

When the ship initially arrived in Berbera, a different account of who owns the fuel was given to the media by the Berbera Port Manager Mr. Hassan Saeed Berbera and oil terminals manager Hassan Ahmed Ibrahim (Embassy), who both stated that the fuel delivered by the MT. Omair was purchased by the Ethiopian government, while the rest belongs to the Somaliland government.

Although it was widely speculated in the past few months that the Berbera Oil Terminals will be leased to Trafigura, this is the first time the Somaliland government has confirmed its deal with the multinational conglomerate’s take over of the Berbera fuel storage facilities, and the company becoming Somaliland’s sole provider of petroleum products.

In August 2018, Somaliland President HE Muse Bihi Abdi renationalized a number of assets that were managed by private companies.

Berbera Oil Terminals, previously managed by Berbera Oil Group, was one of them.

It is unclear how long the government has been in talks with Trafigura to supply fuel to Somaliland and takeover the Berbera Oil Terminals, but government officials have mentioned that the Somaliland government intends to import fuel and supply it to existing traders.

It is unclear if the Trafigura deal is related to these previous statements.

There is no evidence that the agreement with Trafigura to manage the Berbera Oil Terminals and supply fuel to Somaliland as announced by the Minister of Commerce Hon. Mohamoud Hassan Saad (Saajin) was ratified or approved by the Somaliland Parliament.

In comparison, the deal with DP World to manage Berbera Port was ratified by parliament.

Trafigura has a checkered past and has been involved in a number of scandals over the years; in one, it was found guilty of dumping toxic waste in Côte d’Ivoire, that, according to the government took 16 lives and affected thousands with a multitude of health ailments.

The company has since settled the case with an undisclosed payout to 31,000 victims.

The Guardian reported in May that the company’s oil trading division may be under investigation for alleged market manipulation and corruption related to its oil trading activities.

The Somaliland government has in the past entered into agreements with questionable or non-existing companies.

Singapore New Silk Somaliland Energy CO LTD was one of these companies that the Somaliland government announced a major deal with – to build an oil refinery in Berbera and employ 400 National Service graduates.

More than a year after the announcement, there is no activity on the supposed refinery.

It is unclear how much due diligence the Somaliland government has performed to consider its dealings with Trafigura.

Officials from the Ministry of Commerce, Industry and Tourism, as well as Berbera Oil Terminal and Port Authority did not return calls for details on the specifics of the agreement with Trafigura, the fuel it will import into Somaliland, and its planned use of the oil terminal.

This article first appeared in the Somaliland Chronicle and is republished with permission.