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SOMALIA LAW BLOG · III · PROJECTS & INFRASTRUCTURE / BRIEFING
Before you negotiate a Somalia concession, ask who can grant the right
MA
Mohamed Abdulkadir Ali · 31 August 2026 · 8 min read
IN THIS BRIEF
01"Government approval" is rarely one legal right
02Somalia has a concession framework. That does not eliminate authority diligence.
03The federal question is not a reason to avoid Somalia
04A project can be politically approved and legally incomplete
05The law may change while the project is still operating
06Land deserves its own diligence
07Start with the rights, then write the contract
A project can have a government signature and still leave an investor with an authority problem. In Somali infrastructure, the first legal question is often not what the concession says. It is what the person signing it can legally give you.
Imagine a fairly plausible Somalia project.
A developer wants to build and operate a substantial solar facility.
The commercial proposition is attractive. Land has been identified. A public institution is supportive. The parties begin discussing price, term, termination rights, government support and the conditions for financial close.
A great deal of expensive work can now happen before somebody asks a very short question:
Which institution grants each right this project needs?
Not "is government supportive?"
Not "do we have an MoU?"
Not even "who signs the concession?"
Which institution has legal authority to grant the land right?
Which institution licenses the electricity activity?
Which authority issues the permits?
If more than one level of government is involved, where does one institution's authority stop and another begin?
Those questions are less glamorous than project finance.
They can decide whether there is a project to finance.
01 — "Government approval" is rarely one legal right
Somalia's federal structure makes this particularly important.
A project may touch federal legislation, a sector regulator, a ministry, a federal member-state institution, a municipality and a separate landholder.
The contractual temptation is to compress all of that into one concept: Government.
The legal analysis should do the opposite.
Unpack it.
Electricity gives a useful example.
Somalia's National Electricity Act was signed in March 2023 and established the statutory architecture for national sector regulation. The National Electricity Authority now describes licensing generation, transmission and distribution as part of its mandate and has begun issuing regulatory methodologies that apply to licensed electricity operators.
So if somebody offers a developer the "right to generate electricity," the analysis does not end with the contract.
What does the Electricity Act require?
What does the regulator license?
What land right does the project separately need?
Who owns or controls that land?
Who provides interconnection?
Which public undertakings can legally be given by the entity sitting across the table?
A project agreement cannot quietly merge those authorities simply because it would be convenient if one signature covered everything.
Petroleum makes the point even more starkly.
Somalia's Petroleum Law of 2020 created a specific legal structure for petroleum operations, and the Ministry of Petroleum now publishes a growing set of implementing regulations around that framework, including 2025 petroleum-operation and fiscal regulations.
Nobody serious would assume that a general letter from a public body substitutes for the petroleum rights required by that regime.
Other sectors deserve the same discipline even where their legislation is less developed.
02 — Somalia has a concession framework. That does not eliminate authority diligence.
At federal level, Somalia has long had a procurement and concession framework under the Public Procurement, Concession and Disposal Act.
That matters. It gives lawyers and investors an institutional starting point rather than a blank page.
But the existence of a concession law does not answer the harder question in every transaction:
does this particular public entity have authority over this particular asset, activity or right?
That is where project diligence becomes specific.
Take a port-related development.
One part of the project may concern the operation of port infrastructure. Another may concern adjacent land. Another may involve customs arrangements. Another may require municipal permissions. A power component may bring in the electricity regulator. Imported equipment introduces a different set of agencies again.
The fact that one ministry is prepared to sponsor the project is commercially important.
It does not make the ministry every regulator at once.
That sounds obvious when written down.
It becomes much less obvious inside a negotiation where the parties are working from a single term sheet, the project has political support, advisers are under pressure to reach financial close and everyone would prefer the answer to be "yes."
This is why we would normally build an authority map before treating the concession document as the centre of the legal work.
The map does not need to be elaborate.
It needs to answer, right by right:
What is being granted?
Which law creates that right?
Which institution controls it?
Does anyone else need to consent?
How long does the right last?
Can it legally be transferred, mortgaged or stepped into by lenders?
What happens if the institutional framework changes?
Once those questions are answered, the concession agreement becomes easier to negotiate because the contract is no longer being asked to manufacture rights the legal system gives elsewhere.
03 — The federal question is not a reason to avoid Somalia
Foreign investors sometimes hear "federalism" and translate it into "uncertainty."
That is too crude.
Federal systems divide power everywhere. The United States does it. Germany does it. Nigeria does it. Kenya distributes substantial functions between national and county governments.
Somalia's complication is that parts of its allocation of authority are newer, institutionally uneven and still developing through legislation and practice.
That makes the mapping exercise more important.
It does not make investment impossible.
The real mistake is treating Somalia as though all public authority sits inside one undifferentiated state counterparty.
Suppose a project needs land controlled locally, a federal sector licence and a contractual commitment from a public off-taker.
Those are three different legal relationships.
The transaction should show that.
Sometimes the correct structure is multiple agreements.
Sometimes it is a principal project agreement supported by separate licences and land instruments.
Sometimes one authority must give a consent to another institution's grant.
Sometimes the answer is that the proposed public counterparty simply cannot deliver one of the rights the commercial term sheet assumes it can.
Finding that out at the beginning is useful advice.
Finding it out after lenders have begun diligence is a crisis.
One document, several seals: authority in a federal state is rarely singular.
04 — A project can be politically approved and legally incomplete
This distinction matters particularly in markets where investment is actively being encouraged.
A minister may genuinely want the project.
A president or member-state administration may publicly support it.
The relevant agencies may all want the investment to happen.
None of those facts tells you whether the legal instruments needed for the project have actually been assembled.
Political support and legal authority are related.
They are not interchangeable.
Consider the solar project again.
The developer signs an MoU with a public institution. The parties announce the project. Technical studies begin. Perhaps an investor presentation describes the project as "government approved."
Six months later, counsel starts preparing the project documents.
Only then does somebody discover that the land documentation sits elsewhere, the generation activity requires a regulatory licence, and the entity expected to buy the electricity cannot give one of the guarantees assumed in the financial model without another approval.
Nothing improper has happened.
Nobody necessarily misled anyone.
The project simply moved from political proposition to legal transaction, and the two are not the same thing.
The cost is time.
And at financial close, time becomes money very quickly.
05 — The law may change while the project is still operating
Long-term infrastructure creates another problem.
The framework you sign under today may not be the framework governing the project ten years from now.
Somalia is still legislating rapidly across electricity, investment, public-private partnerships, taxation, financial regulation and other commercial sectors.
A twenty-year project should assume that some relevant law will change.
That is not unusual internationally. It is simply more visible in a legal system undergoing rapid institutional rebuilding.
This is where change-in-law drafting matters.
So does the distinction between an ordinary regulatory change every business must absorb and a change that fundamentally alters the economic bargain on which a long-term project was financed.
The contract cannot freeze Somali law.
Nor should it try.
What it can do is say what happens to the project economics if a defined legal change materially alters the obligations the parties priced when they signed.
That is a more realistic form of protection than pretending the regulatory system will remain still.
06 — Land deserves its own diligence
Infrastructure lawyers also learn quickly that projects often become land transactions whether they intended to or not.
A concession to operate something is not automatically a title to the site on which it operates.
And land in Somalia can involve statutory records, municipal documents, historical possession, customary claims and competing narratives about authority.
That means a project sponsor should resist the instinct to treat land as an annex to the "real" concession.
Land may be the real concession.
A power plant without secure site rights is not a power project.
A logistics facility without a defensible lease is not an infrastructure investment.
A lender cannot take meaningful security over a right nobody has satisfactorily established.
The practical work here is often unexciting: documents, maps, site visits, institutional records, counterparties and chronology.
That is precisely why it gets deferred.
It should not.
07 — Start with the rights, then write the contract
There is a persistent temptation in infrastructure transactions to begin with the precedent.
Someone produces a concession agreement used in another country.
The drafting begins.
Definitions multiply.
Risk-allocation schedules appear.
Force-majeure language gets negotiated.
Entire weeks disappear into termination compensation.
Meanwhile, the question that should have come first remains unanswered:
what exactly is the public side legally able to grant?
We would reverse that sequence.
Start with the rights the project requires.
Map each right to the institution that controls it.
Confirm the legal basis.
Identify any second approval.
Work out what must survive a change in administration.
Then draft the project documents around that architecture.
This approach does not make the transaction less ambitious.
It makes the ambition legally legible.
And in Somalia, where enormous amounts of infrastructure still need to be built, that distinction matters.
A concession agreement should record a set of rights the parties actually possess and can actually perform.
It should not be the place where everyone discovers what those rights were supposed to be.
For a project sponsor, that leads to a very simple opening question.
Before asking what the concession says, ask:
Who is granting the right—and what gives them the power to grant it?
Everything else can follow.
This article provides general information on Somali project and investment law and is not legal advice. Somalia's regulatory and institutional framework continues to develop, and the applicable position should be confirmed for the sector, location and project structure concerned.
MA
Mohamed Abdulkadir Ali leads Insaaf's international-client and projects practice. Before co-founding the firm he led the legal side of Somalia's port-sector modernization, advised the Kismayo Port Authority, and led the World Bank's Somalia PPP-framework assessment. Full profile →