Contractor ready to hand over Sh32bn container terminalWednesday May 25 2022
The contractor of the second container terminal (CT2) at the Port of Mombasa is ready to hand over the project after the Kenyan government met set requirements among them appointing a private firm to run it.
Senior officials of the Japanese firm TOYO Construction told the Kenya Ports Authority (KPA) that it is ready to hand over the project which will add an annual capacity of 450,000 twenty-foot equivalent units (TEUs) at the port.
“We are ready to hand over the facility for inspection ahead of commissioning with operations expected to commence in June this year,” said TOYO Civil Construction Division manager Hironori Sahara.
He was speaking during a meeting with port stakeholders led by KPA general managers Sudi Mwasinago (cargo operations) and Abdullahi Samatar (infrastructure development).
Mr Sahara was accompanied by Toyo general manager internal division Harou Yoshida and project manager Yuoichi Yoshino.
Completion of the second phase brings the Port of Mombasa’s total capacity to 2.1 million TEUs.
The first phase of the project which was completed in February 2016 and commissioned in September 2016, increased the port’s annual capacity by 550,000 Teus.
The KPA settled on a Swiss firm, Mediterranean Shipping Company (MSC) to run the terminal to fulfil a loan facility requirement for the construction of the largest terminal at the port.
The MSC, the second global largest shipping line after Maersk through the Kenya National Shipping Line (KNSL) is set to play a critical role in the running of the Sh32 billion CT2.
KPA, MSC and KNSL in February this year made the request at the Common Market for Eastern and Southern Africa (Comesa) Competition Commission as they sought regulatory approval for the transaction that they said would give MSC and KPA joint control of KNSL.
KPA settled on MSC after players failed to object to the move upon expiry of the deadline to give submissions on the transaction by March 22, 2022.
MSC through its wholly-owned subsidiary Shipping Agencies Services Sàrl (SAS) is set to raise its stake to own 47 percent ownership of KNSL while KPA would relinquish about 21.8 per cent of its shares from the national shipping line from 74.8 per cent to 53 per cent of the ordinary shareholding.
“KNSL will, as part of the joint venture, become the new operator of the Mombasa Container Terminal 2 (CT2) at the port of Mombasa in Kenya and commence offering freight forwarding services and container liner shipping services,” said the Comesa competition watchdog in a call to the public to give comments on the transaction
The ministries of the National Treasury and Transport said it would provide a roadmap that would ensure all the necessary steps will be followed in order to adhere to the laws, regulations and procedures for ensuring that the public interest is upheld.
Details of the recent partnership come few months after the amendment of the Merchant Shipping Act which barred private shipping lines from operating port facilities.
The privatization of the new terminal was part of the loan agreement signed between the Japan International Cooperation Agency (JICA) for a loan of Sh32 billion for the construction of Phase II of the terminal at the port of Mombasa in 2017.
The loan from the Japanese government through JICA within the Special Terms for Economic Partnership (STEP) at an interest rate of 0.2 percent and a repayment period of 40 years including a 10-year grace period. One of the conditions for funding of the terminal by the Japanese government was that it would be operated privately.
KPA floated tender to run the terminal where the bidders were reported to include Hutchison Ports Investments, DP World, PSA International, China Merchants Holdings and SSA Port Terminal however, following interference of the process with reports that some bidders were colluding with senior KPA officials, the tender was suspended and it was expected to be floated once CT2 is operationalized this year.
Kenya has continued to revive KNSL which was started in the 1980s to be Kenya’s official shipping line and majority-owned by KPA. In the recent agreement with MSC, KNSL will be a parent company while using MSC assets since it does not own any ship.
This means MSC which has access to over 550 ports globally will be responsible for shipping and handling government cargo.