Dubai: DP World, the port operator with terminals from Brazil to China, has signed an agreement with the government of Somaliland to co-invest $442 million (Dh1.62 billion) in the Port of Berbera.

The two parties have signed a term-sheet agreement to form a joint venture company that will “invest and manage” and transform the port into a “regional and logistic hub,” according to DP World statement sent to Gulf News on Wednesday.

It is understood the agreement was signed during a recent visit to DP World’s offices in Dubai by Somaliland officials.

Somaliland’s President Ahmad Mohammad Mohamoud was reportedly in the UAE last week. Somaliland is an autonomous and impoverished region in the Horn of Africa.

The agreement is non binding but sets the basic terms for the investment that includes investing $442 million in the port “over time.”

The investment is dependent on the port’s performance, the statement said, and will also include the setting up of a free zone.

The development of the Port of Berbera “will provide an additional gateway for Ethiopia that is needed for its growth and serve other land-locked countries along the east coast of Africa,” DP World said.

In March 2015, Dubai-owned P&O Ports said it had entered into “preliminary discussions” with the government of Somaliland to develop ports in the region.

P&O Ports is a sister company of DP World but does not share the same ownership structure.

DP World is owned by Dubai investment company Dubai World while P&O Ports is owned by state entity Ports, Customs and Free Zone Corporation (PCFC).

Sultan Ahmad Bin Sulayem is the chairman of DP World and PCFC.

Somaliland is a breakaway region of Somalia that has functioned as an independent state for twenty years without international recognition.