Major multinational port operators are yet again angling for a chance to manage key services at the ports of Mombasa and Lamu after they lost out in a botched tendering process in 2015.
But the renewed plan to concession services at the two ports has, predictably, been engulfed in a storm despite President William Ruto’s attempt to explain its economic implications.
Opposition politicians led by Raila Odinga have termed the plan as a plot by Kenya Kwanza regime to rip off the country, while unionists and logistics experts say it is shrouded in secrecy. Mombasa Governor Abduswamand Nassir has vowed to scuttle the plan if Coast leaders are not involved in the process.
Unionists and maritime experts have called for the process to start afresh to give all stakeholders a chance to give their input. Questions also linger on whether it is best to privatise, lease out or commercialise port services.
Analysts say the backlash, which has in the past led to shelving of the idea, is due to the government’s failure to involve all stakeholders or explain the idea to Kenyans.
Last month, KPA advertised for bidders from international terminal operators for the development and operations of port assets through public-private partnerships.
According to the advert, Kenya Ports Authority (KPA) is seeking a private partner to develop berths 11 to 14 and container terminal 1 in Mombasa, and to run Lamu’s berth one to three.
Berths 11 to 14 are currently used for conventional or loose cargo (goods not packed in a container) but KPA wants to convert them into a container terminal- the East Container Terminal.
Maritime trade analysts say this is because 90 per cent of cargo that passes through the Mombasa port is containerised. Proponents of the idea say it will raise capital for the projects.
They also argue that the entry of private entity removes bureaucracy, reduces the bloated workforce at KPA, and injects innovation leading to efficiency at the port.
But fears are also rife that selling off, concession, leasing, or commercialization of the ports could lead to job losses. Currently, KPA has 7,000-odd workers.
Shippers Council of Eastern Africa CEO Gilbert Langat questioned the process, saying it was being rushed without input from key stakeholders.
“The disadvantage is the interest of any private sector player who will come in is to make money. We should learn from other ports that have gone that route like Dar,” said Mr Langat.
Until this year, major services at the Dar es Salaam port were run by Tanzania International Container Terminal Services (TICTS). But after 20 years, analysts say services never improved.
“When TICTS took over services at Dar es Salaam, there were talks that it will overtake Mombasa. That was never the case as services deteriorated. We must be careful,” said Langat.
Reports indicate that TICTS contracts expired this year and the Government of Tanzania was in talks with DP World, a Dubai-based port operator, to run some operations at the port.
Dock Workers Union General Secretary Simon Sang’ says there will be job losses at the Mombasa port if the services were leased to a private entity. Like other ports that have leased key services, Mr Sang’ says that more jobs will be created outside the port due to the efficiency of the facility, leading to investment in existing economic zones.
“Direct employment will be lost, say from the current 7,000 to 5,000 people. But indirect employment will go up, leading to revival of the city that is currently not doing well,” he said.
But critics of the union say that the officials are out to ring-fence their members' subscriptions. The union has 5,000-odd members each contributing two percent of their basic salary.
Sang, however, says that although the idea to concession the port is under the Big 4 agenda, the 2017-2027 short-term national strategic plan, he opposed it because it was unclear.
“This idea came to light in 2021 when it was reported that the National Treasury CS had approached Dubai World to develop a special economic zone in Lamu,” said Sang.
The battle for the second container terminal started in 2014 when the government floated an international tender to concession the second container terminal.
DP World was among the 12 top world terminal operators that were shortlisted from a list of 19 that submitted their bids, according to a gazette notice dated April 10, 2015.
The firms that were shortlisted included Chinese-based China Merchant Holdings, Netherlands-based APM Terminals BV, and Dubai-based DP World Ltd.
Cosco Pacific Ltd, Bollore Logistics, Toyota, and Kamigumi Company Ltd submitted a joint bid as Group Maritim TCB, S.L, Mitsubishi Corporation, and Freight Forwarders Kenya.
However, PSA International, which had partnered with a local firm, Multiple Haulers, had the highest marks, with DP World emerging second, according to KPA reports.
But the process to sell off the 450,000-capacity terminal drew criticism from Coast politicians and the union who questioned the economic implications of selling the terminal.
The government stopped the process amid political and legal undercurrents and asked KPA to re-evaluate the technical bids afresh. KPA decided to run the facility.
According to the initial plan the terminal operator was expected to pay KPA a standing annual fee of $18.4 million (Sh1.7 billion) plus a commission based on cargo volumes.
Other sources said that one of the conditions by the Japanese International Corporation Agency (JICA), which funded the Sh27 billion terminal, was that it was to be run by a private firm.
Nassib Mbarak, a logistics expert in Mombasa, said the government can source money from private entities to develop the port without selling off or leasing the services.
“Why should we privatise a profit-making parastatal when there are those making losses? We privatised the one-metre railway line and look what became of it,” said Mr Mbarak.
Mbarak and Langat agreed that it was wrong for the process to start without the involvement of Coast leaders, especially the Mombasa and Lamu county governments.
“All over the world, port cities must get a share from the facility. Someone is trying to jump the ship. All stakeholders must be involved,” said Langat.
He said most marine transport experts agree that KPA should be converted into a landlord so that other services be commercialised to enhance efficiency and make it competitive.
“I was at Tangier Port in Morocco where all three terminals have been commercialised and everything is done by machines with a control room with only 15 people,” said Langat.
All three terminals of Tangier Port on the Mediterranean Sea are operated by APM Terminal, and owned by Denmark's Maersk, Germany's Eurogate, and a local firm.
Data from the World Bank shows that Tangier handled 107.8 million tonnes of cargo in 2022, a six per cent surge from 2021. Mombasa processed 35 million tonnes of cargo in 2022.
“Is it a sale of operating concessions where KPA is a landlord while terminal operations are done by its tenants or an outright sale,” asked Mwanaisha Kadenge, a maritime consultant.
She said that while international terminal operators have been a success in the form of capital, managerial expertise, and market acumen, their interests are global rather than local.
“Their interests are profits rather than economic benefit of Kenyans, and those that would take up Mombasa would not be different. That is why things must be clear from the start,” she said.
On the three berths at the Port of Lamu, reports indicate that the government was also open to allow major global powers to establish military bases in Lamu just like in Djibouti.
France, the US, China, Germany, and Italy have all established military bases in Djibouti. In Lamu, the USA has a small military base at Manda.
Meanwhile, reports indicate that Ethiopia, a landlocked since 1993 when Eritrea gained independence, is also keen to acquire a port in its quest to revive its naval force.