Sh30 billion port terminal deal faces stiff opposition

Amendment Bill Merchant Shipping Act, 2009, seeks to change law on management of container terminal

The planned take over of the second container terminal at the Mombasa Port by Kenya National Shipping Line (KNSL) has raised questions.

The deal could give control of Sh20 billion revenue collected from operations at the port to a private company that has entered into a Memorandum of Understanding (MoU) with KNSL.

Recently the government approved the revival of the dormant State-owned KNSL to handle cargo and also battle for private business within the port.

In an new Amendment Bill Merchant Shipping Act, 2009, presented to Parliament, government is seeking to change the law to allow KNSL and a private foreign entity to take over management of the container terminal in Mombasa.

The proposal would result in creation of a special purpose vehicle to run the Kenya Ports Authority (KPA) facility, opened in 2016 and can handle over 500,000 (Teus) twenty-foot containers per year.

The proposed law will give powers to Transport Cabinet Secretary to exempt government entities or enterprises from being barred to operate the terminal. Initially, the law prohibited a shipping line from operating a terminal.

Italian firm

“The Cabinet Secretary may, on the recommendation of the Authority, by notice in the Gazette and subject to such conditions as may be appropriate, exempt any government entity or enterprise from any provision of this Act ...,” Section 4 of the Statute Law (Miscellaneous Amendment) Bill, 2019 states. However, the government has gone ahead to sign an MoU with Mediterranean Shipping Company (MSC), an Italian firm as partner in the venture that is expected to benefit KNSL.

Interestingly, the shipping line formed in 1989 under the Merchant Shipping Act which was sole government owned under KPA, moved majority of its shares to MSC as a strategic partner.

Industry players are now questioning how the Sh30 billion terminal financed by a loan from Japan is being concessioned to a private Italian company, one of the biggest shipping lines in the world.

Dock workers union chair Simon Sang claimed the deal was a fraud akin to the Goldenburg scam.

“Why are we auctioning our port to a private family business in Italy? The whole deal stinks, we must not allow it to come to fruition,” said Mr Sang.

He said the union had written to President Uhuru Kenyatta, the National Assembly Public Investment and Transport committees to look into the matter. “World over, there is no government that does shipping business, what interest does Kenyan government have, all they need to do is offer an enabling environment,” said Sang.

The government in its defence has argued that once the consession starts, KPA profits will increase from additional maritime charges including pilotage, wharfage, and stevedoring on big ships docking into the port.