Why Coast leaders not for port privatization

By Patrick Beja

There is a political lull at the coastal city of Mombasa after the Government’s hasty retreat on plans to privatise the port.

The port, which is a major commercial centre and key employer for the coastal communities, is probably one of the most politically sensitive sectors in the country.

When the State recently tried to rush the privatisation of berths 11 to 14 and the entire stevedoring services at the port, reportedly to complete the programme before next year’s electioneering period and expiry of President Kibaki’s term, it sparked political heat.

During a port stakeholders’ conference held at Mombasa Beach Hotel on February 28, the Dock Workers Union, which represents Kenya Ports Authority (KPA), boycotted while several MPs from Coast and elsewhere walked out.

The conference had been called by the Privatisation Commission, Ministry of Transport, Ministry of Finance and KPA, allegedly to meet key stakeholders and conclude consultations on port privatisation.

The Government’s aim was to conclude the privatisation programme by end of this year to attract investors to finance modernisation and expansion of the port.

Suspended process

But on March 3, less than a week later, the Government swiftly suspended the privatisation process indefinitely.

In a letter dated March 3, Transport PS Cyrus Njiru wrote to KPA Managing Director Francis Gichiri Ndua informing him the Government had decided to stop the process.

This has since calmed the dockers and Coast MPs, led by Coast Parliamentary Group (CPG) chairman Benedict Fondo Gunda, and secretary Dan Mwazo.

The State rescinded its decision at a time when the CPG members were preparing a Motion to be tabled in Parliament by Garsen MP Danson Mungatana to challenge the manner in which Government rushed the privatisation and failed to widely consult over the plans.

"This is to inform you that as a result of serious concerns raised about the alleged privatisation of Mombasa port, and the manner in which the process is being executed, the Government has decided to stop the process with immediate effect," wrote Dr Njiru.

He added: "Please take appropriate action to implement the Government decision as advised."

Apart from MPs from the Coast, other legislators who had voiced concern over the privatisation were Saboti MP Eugene Wamalwa, Mwala MP Isaac Muoki and Nominated MP Musikari Kombo.

Prime Minister Raila Odinga, Tourism Minister Najib Balala and Trade’s Chirau Ali Mwakwere had also said they were not aware of the port privatisation plans.

The Coast MPs, particularly those from Mombasa County, have since remained vigilant, vowing to oppose "secret plans" to privatise the port without wider consultations.

Changamwe MP Ramadhan Kajembe and his Likoni counterpart Masoud Mwahima insist the port cuts across their constituencies and they must be consulted before any major decision is made on it.

Loss of jobs

"We play host to the port of Mombasa and we must be consulted on any new programmes. We oppose privatisation of the port because it appears to be a plan to place the facility in private hands and cause massive loss of jobs," Kajembe, who is also Assistant Minister for Environment, said.

Mr Mwahima has threatened to lead road protests from Lunga Lunga border in the south to Mombasa port if Government imposes unpopular programmes.

Coast leaders also argue that under Schedule 4 of the new Constitution, harbours and ferries fall within the functions of counties, in this case Mombasa County.

It is not the first time the Kibaki administration has tried to implement a privatisation programme at the port.

In 2005, the Ministry of Finance pushed for privatisation of the Mombasa container terminal, but workers and Coast legislators raised concerns of possible job losses.

When he toured Mombasa last week, Vice President Kalonzo Musyoka insisted that privatisation of port facilities was still a good idea.

"Even though the proposed privatisation of some of the port facilities has been halted, the role of existing and future private partners will continue to be treasured, as they provide impetus for efficiency enhancement in port operations," he maintained.

Stiff competition

Addressing port stakeholders recently, Transport Minister Amos Kimunya argued that Mombasa port was facing stiff competition from Tanzania, Mozambique, South Africa and Djibouti ports, which were being improved, and Kenya has no option but to develop and expand its facilities.

He said in December 2008, the Government adopted a model to transform Mombasa into a landlord port to attract private sector funding and management resources.

Kimunya said KPA would be run like the Kenya Airports Authority, where operations at the airports are performed by private firms.

In a statement read out to port stakeholders in Mombasa recently, Deputy Prime Minister and Minister for Finance Uhuru Kenyatta noted Mombasa port required about Sh163 billion to finance additional port capacity in the next ten years.

But the Dock Workers Union Secretary General Simon Sang roots for port modernisation and expansion through commercialisation as opposed to outright privatisation.

Mr Sang has urged the State to stop privatisation of berths 11 to 14 and outsourcing of stevedoring services, arguing that the private sector should be allowed to build new port facilities and not the existing ones where Government has already invested heavily.

He prefers that the private sector builds facilities at the proposed Dongo Kundu free port facilities to doing the same within the existing port.

The union also prefers that Government adopts the Singapore, Durban in South Africa and Port of Rotterdam in the Netherlands models where ports remain in the hands of the State.

Sleeping giant

"We need to form a port expansion committee made up of all the relevant stakeholders and kick-start the urgent expansion programme," Sang argues.

Mr Uhuru says the Government has guaranteed a loan amounting to Japanese Yen 26.5 billion to Kenya to finance development of the first phase of the second container terminal. The Government and KPA have in addition provided Sh8.4 billion towards the project.

The second container terminal is expected to be complete by 2015.

The Government is also pumping in Sh5.2 billion to dredge the port to allow bigger vessels.

Development of Mombasa port has become urgent because the facility, with an initial capacity of 20 million tonnes a year, has already attained 19 million tonnes. The port was also built with an initial capacity to handle 250,000 teus (20ft equivalent units) but the containerised cargo has grown to about 700,000 teus.

But Uhuru says the exchequer cannot finance more port expansion projects and the option would be to tap from the private sector.

"I must, therefore, urge all of us to give a chance to the proposed reforms at the port to unlock the potential of this sleeping giant," Uhuru says.

His statement was presented to the stakeholders by Kimunya, who wants the privatisation process completed in just one year.