advertisement
Columnists

Why I now support container terminal deal

port of Mombasa
A ship arrives at the port of Mombasa. FILE PHOTO | NMG 

I have in the past opposed the idea of handing over the management of the second container terminal to the State-owned Kenya National Shipping Line (KNSL) mainly on the grounds that the entity does not possess the capacity to manage this modern facility.

But now that it is more or less a fait accompli, and given that an international player- the Mediterranean Shipping Company (MSC), has been brought into the picture under a fresh negotiated joint venture partnership, - I have decided to climb down from my earlier position as I believe that what is pertinent right now is to debate what needs to be done to make the relationship between (MSC) and the government beneficial to the country.

How much do we get from joint ventures with foreign investors? And, what standards of public disclosure should we insist on when negotiating join venture deals with international players?

Experience in this country has turned supporters of the policy of privatisation and joint- venture deals into cynics.

Indeed, the policy of privatisation as a model has had very few successes in this country.

advertisement

Neither have the joint ventures that we have in the past forged between State-owned entities and international players had spectacular success.

But what I have observed over the years is that tends to work and succeed are joint-venture relationships where the government enters into partnership with experienced international and world class players in specific sectors.

The two best examples that immediately come to mind in this regard is the partnership between the government and UK’s Vodafone in Safaricom and Kenya Airways/KLM join venture that proved to be very successful at least in the initial stages of the relationship.

It is for this background and reason that I am willing to give the partnership between MSC and KNSL my qualified endorsement, my hope being that the relationship will allow us to nurture our own word class shipping line.

KNSL was established in 1987 as a national carrier to handle containerised export and import freight cargo, to and from ports in Kenya. However, the company failed to grow into an effective national carrier.

In 1997, KNLS entered into a strategic relationship with MSC, the second largest shipping line in the world.The point of departure right now is that the government has this time round negotiated new terms.

What the government should do, however, is to publish the contents of the agreement it has signed with MSC in the name of transparency.

The government should disclose all benchmarks for performance that have been agreed so that Kenyans can in future evaluate and monitor whether the partnership is benefiting the country. I make this point because I have recently come across some of the documents that the joint venture partners have signed and come to the conclusion that the MSC may find it hard to deliver on some of the promises and commitments.

For instance, MSC has committed to lifting specific volumes of cargo, including government cargo.

The shipping line has also committed to allow KNSL to carry transshipment cargo under the so-called East Africa Express feeder service using KNSL charted owned vessels.

MSC will also guarantee competitive slot rates. Under the arrangement, KNSL will call all ports called by MSCL, allowing the State agency to expand its network.

MSC will allow use of its empty depot facilities by KNSL at discounted rates. Perhaps more significant, the foreign investor has committed to giving KNSL technical support and advice on registration of vessels in Kenya and on how to make the Kenyan register attractive to international shipping companies.

Going forward, what we will need is closer monitoring and tracking to determine whether MSC will live up to the commitments. They include promises to help boost our tourism sector through supporting cruise shipping services.

Apparently, MSC has made a commitment to connect KNSL with its own cruises and to help the latter develop its cruise business line.

The company has also committed to give Kenyan seafarers 30 per cent of job opportunities deriving from its own cruising business. Let’s wait and see whether the experiment will work.

advertisement