MPs fail to stop Uhuru's port deal with Swiss firm

The newly installed gantry cranes off-loads some of the containers from the MV Busan Trader soon after she docked at the port of Mombasa's second container terminal on Tuesday, April 27, 2016. [File, Standard]
The National Assembly yesterday approved President Uhuru Kenyatta's proposal to have the Kenya National Shipping Line (KNSL) and a Swiss firm jointly run the second container terminal in Mombasa.

This followed heated debate on President Kenyatta's proposal after he rejected MPs' proposals to nationalise the container terminal.

The President had his way when MPs voted that the Mediterranean Shipping Company (MSC), a private foreign entity, jointly operate the second container terminal with KNSL.

Requisite numbers

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This was after MPs failed to raise the requisite numbers to overturn the President's memorandum to the House.

A number of MPs, most of them from the Coast, had rejected the Government push to have KNSL and MSC jointly operate the container terminal. The lawmakers instead wanted to have KNSL fully owned by the Government.

The Government and MSC own the firm on 53:47 per cent shareholding basis.

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But Uhuru rejected the version of the Bill to amend the Merchant Shipping Act, 2009 passed by the National Assembly.

Last Thursday, National Assembly Transport Committee chairman and Pokot South MP David Pkosing tabled the Bill for the second time, alongside the President's memorandum spelling out his reservations.  

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According to the initial proposal, the merger would have resulted in creation of a special purpose vehicle to run the Kenya Ports Authority (KPA) facility opened in 2016.

It also sought to give powers to the Transport Cabinet secretary to exempt Government entities or enterprises from being barred to operate the terminal.

Uhuru, in his memorandum to Parliament after he refused to assent to the Bill, noted that the restriction would disadvantage KNSL whose majority shareholding is held by the government, through the KPA.

The shipping line formed in 1989 under the Merchant Shipping Act, which was Government-owned under KPA, moved majority of its shares to MSC as a strategic partner in a bid to attract investment.

The Government, in defence of the merger, argued that once the concession starts, KPA profits will increase from additional maritime charges.

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"Those opposed to the KNSL merger are not sincere and are fronting the interests of some big shipping lines. We expect 50,000 jobs and Mombasa to be a trans-shipment destination. This will make our port competitive," said Mr Pkosing.

But MPs led by Abdulswamad Nassir (Mvita) argued that what the Government was doing is to give away the second terminal for a pittance.

"The terminal generates Sh10 billion per year. We are simply giving MSC 47 per cent of that for a promise of jobs which we can create if we wholly own the shipping line and retain the billions," Abdulswamad said.

He wondered what would happen if KNSL offloaded more of its shares to the MSC thus losing majority shareholding.

"There are many unanswered questions in this deal. How much money will they be getting from the terminal? Will what they get be commensurate with their input? What are they putting in return and what kind of jobs are they promising?" the MP said.

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He said it was ironic that the Government wanted Kenya Airways, a national carrier, nationalised while giving away a shipping line "for free".

Better option

Institute of Chartered Ship Brokers branch secretary Elijah Ndung'u said the best thing the Government should have done was have KNSL charter ships and operate them rather than give business to MSC.

"No country wants to let its port be controlled by foreign firms. Instead let us have our own ships as a country and run the business," said Mr Ndung'u.

He said he did not know why the Government wanted to give out a facility that was raising Sh9 billion in revenue in exchange of Sh3 billion to be paid by MSC.

Dock Workers Union chairman Simon Sang described the deal as "fraudulent and driven by vested interests".

“Why are we auctioning our port? The whole deal stinks. We must not allow it to come to fruition,” said Mr Sang.

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President Uhuru KenyattaKenya National Shipping LineMediterranean Shipping CompanyMerchant Shipping Act2009