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Legal hurdles stall Sh31.5 billion second container terminal concession plan

By Kamau Muthoni | January 16th 2016
Eng Abdullahi Samatar (second left) of Kenya Port Authority and Managing Director Gichiri Ndua (right) show Transport Principal Secretary Eng John Musonik (seond right) a sketch plan of the second container terminal during a tour of the section last year. [PHOTO: GIDEON MAUNDU/STANDARD]

The Government's plan to open up the Sh31.5 billion second container terminal to the private sector for operation is now marred by multiple legal cases instituted by disgruntled bidders.

The project meant to increase Kenya's trade along the coastline might not start any time soon after another case was filed before the High Court by a consortium comprising of a Chinese firm COSCO Pacific Limited and Paramount Bank seeking to compel Kenya Ports Authority to evaluate its financial bid.

The case by COSCO consortium comes after another one was filed late last year by Netherlands-based company, APM Terminals BV, to argue its side of the story on the preliminary evaluation of the tendering process.

KPA had written to COSCO on December 31, 2015 notifying it that it had failed at the preliminary evaluation stage. "The applicant (COSCO) is seeking an order to quash the decision of Kenya Ports Authority contained in letter dated December 31, 2015 advising the applicant that its bid was unsuccessful upon review at stage one."

"Is also seeking an order compelling KPA to carry out financial evaluation of the applicant's bid in adherence to the bid document and the addenda," COSCO's lawyer Gatonye Waweru said in court documents filed before High Court Judge George Odunga.

The decision by KPA, according to Mr Gatonye, was made without his client being represented or being invited to tell their side of the story. In the other case filed by APM Terminals BV, other bidders; Bollore, Toyota Tsusho Corporation, Kamigumi Company, Mitsui Engineering and International Container Terminal Services, all who were eyeing the lucrative deal were drawn in.

"The evaluation report is extremely crucial to the applicant's case and if the hearing of the petition will proceed on September 15 without disclosure, the entire petition will be worthless," the court heard.

Kenya Ports Authority last December invited firms to apply for tenders to operate phase one of the terminal, which has two berths. The concession was slated to run for 25 years, beginning 2016 after completion of the terminal.

Twelve firms were shortlisted for the role of concessionaire of the second terminal, from a list of 19 firms that had sent in applications. The authority, however, locked out the Netherlands-based company out of the process on preliminary stage prompting it to move before the petition committee in order to revert the decision.

"The applicant's contention is that the second respondent in conducting the preliminary evaluation acted unfairly and discriminatorily against the applicant and it was on the basis of the impugned decision that it disqualified the applicant," the lawyer argued.

The second terminal job will cost close to $300 million (Sh31.5 billion) and will have two main 300 metres and 210 metres container berths. The former will be dredged to a depth of 15 metres while the latter will be 11 metres. The Japanese government has financed construction.

Once complete, the first phase will add capacity of 450,000 twenty-foot equivalent unit (TEU) with subsequent work planned to increase this to 1.2 million TEU by 2019.

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