The Kenya Ports Authority (KPA) has initiated plans to lease some of its key assets as part of an ambitious plan by the State to revitalise the maritime industry through public-private partnerships (PPPs).
In what appears to be a change of heart on a proposal by the previous administration to hand ports to private investors, KPA managing director William Ruto on Monday invited bids for the operation and management of critical port facilities at the Mombasa and Lamu ports.
“The Kenya Ports Authority invites sealed bids from eligible tenderers for qualification of bidders for the development and operation of port assets through PPP (Lamu container terminal berth 1-3, Lamu Special Economic Zone, Mombasa port’s berth 11-14 and Mombasa port container terminal 1,” the official said in a tender call.
The State had initially opposed a similar plan that had been mooted by the previous administration amid claims that post assets had been secretly sold to Dubai Port World FZE.
The tender call comes months after the Kenya Development Corporation (KDC), a development finance institution, disclosed the Kenya Kwanza administration was scouting for private players to run sections of Kilindini Harbour, Dongo Kundu Port, Lamu Port, Kisumu Port, and Shimoni Fisheries port in an ambitious Sh1.4 trillion plan that is aimed at making the northern corridor competitive.
“The ports are confronted with the challenge of congestion and, therefore, higher dwell times for cargo. The ports will be leased/concessioned to private operators with landlord-type port management system,” states the KDC in its pitch to potential investors.
The State projects to raise Sh1.46 trillion ($10 billion) through the PPP exercise. Further, the government is seeking up to Sh44.5 billion ($304 million) worth of private investment into the Lamu port, with a big chunk of the money being used to develop the port’s agri-bulk and liquid bulk terminals.
More than two years after Lamu port started operations, Kenya has not benefited from it for failing to attract business, leaving infrastructure worth billions of shillings under-utilised.
The Act was amended in 2019 and gave the Transport Cabinet Secretary powers to exempt government-owned companies from the requirement.
To save the situation, President Ruto in June announced that the government would place bids to attract the best private companies to run the facility.
During the President’s tour in the Coast region last week, he announced plans to seek a partnership under PPP to run Lamu port and equip key scanners at the port of Mombasa to improve two key country’s commercial ports.
According to President Ruto, the ports are confronted with the challenge of congestion and, therefore, higher dwell times for cargo thus he called for the lease or concession to private operators with a landlord-type port management system.
Even as the bids are placed, already, the government has been courting Dubai and Saudi Arabia multinational logistic companies for a possible investment at the Lamu Port.
The concessions once signed, could give DP World operating concessions at Kenya’s major ports, including Mombasa, Lamu, and Kisumu.
At Mombasa Port, DP World is to be allocated four berths which currently are unable to handle container operations.
Under the proposal, DP World would turn them into a modern multipurpose terminal capable of handling one million TEU.
At Lamu Port, DP World was set to operate three berths and develop a 500-hectare parcel into a special economic zone, mainly focused on agricultural activity and servicing the Lamu corridor (the highway that connects the port to Ethiopia and South Sudan).
