Workers walk past containers of Maersk. PHOTO | FILE
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Court rules that KPA cannot rely on a new clause — which excludes shipping firms from operating freight stations — to lock out Maersk, clearing the way for the Danish giant to submit its tender for the multi-billion shilling project.
KPA last December invited firms to apply for tenders to operate phase one of the terminal, which has two berths.
Global Danish logistics conglomerate Maersk has won a court battle to compete for a lucrative tender for the operation of Mombasa port’s second terminal.
High Court Judge Justice George Odunga ruled last week that Kenya Ports Authority (KPA) cannot rely on a new clause — which excludes shipping firms from operating freight stations — to lock out Maersk, clearing the way for the Danish giant to submit its tender for the multi-billion shilling project.
Maersk filed the suit in January in fear of being locked out of the bid.
“I grant an order prohibiting KPA from denying the Maersk the opportunity to participate in the tender,” the judge ruled.
Justice Odunga said the new clause is the subject of another court case filed in Mombasa in 2010, and that the presiding judge issued temporary orders stopping its implementation until the suit is concluded. Maersk is among the 14 logistics firms in the 2010 suit.
KPA last December invited firms to apply for tenders to operate phase one of the terminal, which has two berths.
The concession is for 25 years beginning 2016 after completion of the terminal. KPA argued that the orders in the 2010 case are temporary hence cannot affect the tender it advertised.
“Court orders are binding be they final or temporary and disobedience cannot be excused merely because they are temporary. I accordingly hold that the rule of law enjoins the parties to comply with the existing orders in the petition.”
Maersk moved to the High Court through its parent firm-APM Terminals.
Construction of the second terminal is expected to ease operations at the current terminal, whose usage is already above the installed capacity.
Mombasa port is amongst Africa’s busiest with over one million 20-foot equivalent units cleared annually. It will be the first terminal to be managed by a private company in a move aimed at improving services.
A total of 12 firms have been shortlisted for the role of concessionaire of the second terminal, out of 19 firms that had sent in applications.
Other firms include China Merchants Holdings and SSA Port Terminal, both listed among the top 10 world terminal operators alongside Maersk.
KPA had also told the judge that it is not among the parties in the 2010 Mombasa suit, hence is not affected by the orders issued in the case. But Justice Odunga said the order stopping implementation must still be obeyed.
The judge added that it was in the public interest for KPA to respect the order so as not to set a dangerous precedent of disobeying the court’s directives.
“In my considered view, the issue of the constitutionality of a provision of a statute cannot be said to be restricted to the parties before the Court. Public interest in my view dictate that court decisions be adhered to,” the judge added.
The Kenya Maritime Authority, an interested party in the suit, defended the new clause, arguing that it was implemented as part of a plan to strengthen the capacity of local firms in the shipping industry.
State-run KPA said the first phase of the $300 million (Sh2.7 billion) terminal will comprise two berths to be handed over by the contractor in March 2016.
By 2016, the new terminal is projected to have a capacity of 450,000 twenty-foot equivalent units (TEUs), a measure of container capacity, and rise to 1.2 million TEUs by 2019.
Kenya is also building a second port in Lamu, north of Mombasa, with a capacity of 23 million tonnes per year.
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