Lease to earn KPA Sh1t, says Ruto

KPA Managing Director William Ruto (right) and Ethiopian Transport and Logistics Minister Alemu Sime at the Port of Mombasa on August 15, 2023. [Robert Menza, Standard]

The State expects to raise up to Sh1 trillion through the planned concession of some the services at the ports of Mombasa and Lamu, a move that has sparked opposition from Coast leaders and activists.

Kenya Ports Authority (KPA) Managing Director William Ruto said the agency will also collect an annual levy of between Sh50 billion and Sh60 billion from each concessionaire for the use its berths and equipment.

"Those who win the tenders to run port services will pay KPA between Sh500 million to Sh1 trillion," said Ruto in an exclusive interview, adding that the plan will benefit the country and bolster efficiency.

He added: "We will also annually levy them between Sh50 billion and 60 billion for the use of berths and equipment. We will be collecting a lot of money without any expenditure."

KPA has already advertised an international tender for private companies keen to operate some services in Mombasa and Lamu to apply, despite strong opposition from a section of Coast leaders.

KPA seeks bidders to develop and operate Lamu's container terminal berth 1 to 3, Lamu Special Economic Zone, Mombasa Port's berth 11 to 14, as well as Mombasa Port container terminal 1.

However Coast leaders led by Mombasa Governor Abdulswamad Nassir have demanded that they should be involved in the plan to guarantee benefits for the people of the Coast.

But human rights activists led by Julius Ogogoh, Executive Director of Commission for Human Rights and Justice (CHRJ), have threatened to challenge the deal saying it was shrouded in secrecy.

"The issue of privatisation of assets of profit-making parastatals like KPA should be as transparent as possible. We have bad history with such ventures like sugar firms and Kenya Railways," said Ogogoh.

Mr Ogogoh said although there was need to seek private equity to develop the ports and make them competitive, ports are strategic assets with a direct impact on the country's security and safety.

Yesterday Captain Ruto said some foreign investors were ready to inject Sh45 billion in the development of Mombasa Port to make it an industrial city manufacturing goods for export.

"The two ports are expected to reach full capacity by 2047 as indicated in our master plan. That is why we must expand them but innovate to make them efficient," he said.

Ruto said all ports in Europe have been leased to private developers who have turned them around, adding that it was only in Africa where the ports are still run by their governments.

In neighbouring Tanzania, DP World Ltd has won the tender to operate part of Dar es Salaam port, in a deal that will see it inject Sh36.9 billion ($250 million) to upgrade the facilities.

In a deal announced six days ago, DP World, which also has interest in Somali and Mozambique, will run the Dar es Salaam Port for 30 years.

"Mombasa and Lamu will not be able to compete with ports such as Dar-es-Salaam, which has signed a 30-year concession with DP World if we won't lease out some services," said Ruto.

He added that investors who were interested in both ports were also keen on putting up manufacturing industries to manufacture goods for export through the two ports.

The government has already set up special economic zones near the two ports.