Kenya Kwanza queries state deal with foreign firm on three ports

“Kenyans are probably staring at the biggest corruption scandal ever. It is a clever machination to fleece billions of shillings before a new government takes over,” claimed Kenya Kwanza in reaction to the letter signed by National Treasury CS Ukur Yatani in March. The letter indicated that government would nominate Dubai Port World to operate, develop and manage the container terminal at Lamu port. The coalition claimed the establishment of Azimio political outfit was to perpetuate “state capture” and privatise strategic national assets using offshore companies, whose agents are in the top “echelons of Azimio leadership.”

But Mr Yatani, while confirming plans to expand Mombasa, Lamu and Kisumu ports, said government had not signed any agreement with DP World, but only had discussions with the company.

The talks, he said, are covered by agreements that Kenya has with UAE on cooperating in different economic areas. These include the operation and management of the Lamu Port as well as development of Special Economic Zone (SEC) in Lamu.

In the letter, the government indicated that DP World would equip, operate and manage berths One to Three of the container terminal in Lamu and any other subsequent expansion. The Lamu deal involves development of a SEC on 500ha next to the port, focused on agricultural value addition and serving the Lamu corridor into Ethiopia and South Sudan. The plan also includes redevelopment of Mombasa port’s berths 11 to 14 into container berths capable of handling 1 million 20-foot equivalent units.

The government wants DP World to develop a port-linked SEC in Mombasa to be aligned with the development of berths 11 to 14 at the port.

At the Kisumu port, the deal includes a cold chain and logistics park meant to transform the port into a logistics hub for Western Kenya, Uganda and the Democratic Republic of Congo. The cold chain is to ensure agricultural products and fish from the area are exported.

The government also wants DP World to develop a rail-linked cold chain and Inland Container Depot (ICD) in Naivasha to service Central Kenya and enable the transfer of cargo from the Standard Gauge Railway (SGR) to the narrow gauge to Kisumu.

“The proposal should include an implementation plan for each project. DP World is expected to sign a non-disclosure agreement with GOK to enable access to information and documents to facilitate the preparation of the detailed commercial proposal. The Attorney General, who is the legal advisor of government, has already cleared this,” read the letter in part. Yatani said the purpose of the letter was to request DP World to commence the preparatory activities for the projects.

Yesterday, the CS told The Standard the government had realised that to encourage economic activities along the Lapsset corridor, it should engage in partnerships with renowned port development entities.

Yatani said business people had been importing second-hand vehicles and other goods from Dubai, and that it was government’s plan to convert Lamu port into Africa’s Dubai. “This is a statement of intent and we are looking forward to having a relationship on this development. We want to create this (Lamu Port) as a nucleus of logistic development along our corridor and also beyond,” he said.

The CS added that Kenya would resist scenarios that might give unfair advantage to DP World or UAE to the detriment of Kenya. He denied that the government was giving away the ports. “It is just an expression of interest to partner together to create jobs and opportunities for people.

“Any government has long-term development plans. We also have long-term plans as far as Lapsset (Lamu Port South Sudan Ethiopia Transport Corridor) is concerned. Lapsset has been with us for 10 years. It’s the Lapsset dream to reach South Sudan.

“We have been working on expanding infrastructural projects in Mombasa, Nairobi, Nanyuki and Kisumu. We discovered that for us to encourage economic activities along the corridor we needed partnership of renowned port developing companies – there are many in china, Singapore,” Yatani said.

He said the government cannot kill its dream of expansion of the ports and development of special economic zones for fear of criticism. “Our dream is to make a huge economic zone in Lamu so that people dealing with imports from the hinterland as far as DRC or from within this country can find a home in Lamu,” he argued.

In the case of UAE, he said, the government has signed bilateral agreements that cover such areas as port management, an area where the Arabian country is relatively strong.

“We have bilateral cooperation agreements with different governments. In this case we have a standing bilateral and economic cooperation with the government of UAE and have narrowed down to a number of sectors where UAE has an advantage such as logistics, port management and several other areas,” said Yatani.

He also noted that there is limited time for the current administration to see through the process of handing over the operation and management of Lamu Port as well as a number of berths at Mombasa Port to a private entity.

Instead, he said, the Jubilee government is laying ground for the next government in case it decides to pursue the project to its conclusion. “There is little we can do between now and the next one month. We have only identified a framework of cooperation,” he said.

[Additional reporting by Kamau Macharia]