Shipping & Logistics

Secrecy on Mombasa container terminal pact queried

Mombasa port at the second container terminal
Mombasa port at the second container terminal that is now operational. FILE PHOTO | NMG 

The rush by the government to move the management of the second container terminal from the Kenya Ports Authority (KPA) to the new state-owned Kenya National Shipping Line (KNSL) in partnership with a foreign-owned shipping firm has raised questions with critics asking that the agreement be made public. The pact was struck with.

The agreement entered between KPA, KNSL and Mediterranean Shipping Company (MSC) has remained secret with very little said on concession terms with MSC seen as the major beneficiary in the deal.

During the signing of the agreement, a lot was said on how Kenya would benefit from the foreign firm coming in as the government works to revive KNSL which has been dormant for more than 28 years.

President Uhuru Kenyatta recently witnessed the signing of two agreements a few days after the Merchant Shipping (amendment) Bill 2019 became law amid protest from some coast legislators.

President Kenyatta said more than 1,500 youth would be offered sea time training by the MSC, a partnership which will ensure Kenya produces hands-on employees in the maritime sector with more than 3,000 people expected to be employed yearly.


“The agreement we have signed today is expected to facilitate growth of traffic throughput at Container Terminal 2 to over one million twenty feet equivalent units (TEUs)," said Mr Kenyatta.

But critics led by Dock Workers Union (DWU) Secretary General Simon Sang said they would move to court to push the government to rescind its decision to privatise the terminal.

“Two civil society organisations, namely, the Muslim for Human Rights and The Katiba Institute, and several coast MPs will be supporting DWU in court to ensure justice is done for coastal people. We shall also ask that the agreement be made public to know the real deal,” said Sang.

Insiders told Business Daily that the MSC has committed itself to run berth 21 and 22 at the terminal for 30 years before the agreement is reviewed.

MSC joins five more private companies operating at the port of Mombasa with their agreements also remaining secret.

Transport parliamentary committee has demanded all agreements entered previously between the KPA and the five companies on the management of the berths at the port of Mombasa be made public.

Committee’s Chairperson David Pkosing said they will summon KPA and more than five companies which have been operating in different berths at th port of Mombasa to shed more light about their agreements and how the government benefits from the deals.

Mr Pkosing said the companies have been operating at the facility and benefiting from the national resources without declaring profits and how much they pay as concession every year.

“It is good that we engage because the KPA is a public company. We are yet to know how a number of companies are operating at the port of Mombasa for years without legal agreement; that is why my committee will summon them share details on their deals with KPA,” said the chairman.

“We understand a number of foreign shipping companies were opposing government bid to have KNSL operate the terminal but it is good we have achieved that to ensure Kenyans benefit from their own resources."

Mr Pkosing also asked foreign envoys to desist from interfering with government agenda of creating more jobs for its people.

“The four envoys condemning the government process of revitalisation its own organs is uncalled for though we support their partnership. We understand they represent their countries interest but on issues affecting our economy they should keep a distance,” he said.

Last week, four ambassadors namely Mette Knudsen (Danish), Aline Kuster (French), Yoshihiro Katayama (Japan) and British High Commissioner Nic Hailey called on the government to ensure the process of selecting a firm to manage CT2 at the Port of Mombasa be subjected to open bidding and be done in transparent manner.

They expressed concerns over how the government cancelled the tender which was advertised in 2014 inviting bidders prematurely in 2016. When the tender was put out, the big names in international port operations put in their bids.

The Chinese group PSA International, which had partnered with a local group Multiple Hauliers, emerged tops followed closely by Dubai World, Cosco Pacific and Paramount Bank (92.98) of Singapore, Siginon Group of Kenya.

But as it was to turn out, tendering was cancelled — against the backdrop of intense lobbying by powerful peddlers of political influence.

The second container terminal was going to be critical because it would double the capacity of the port to allow larger container vessels to dock.

The CT2 which was completed in March 2016 with the support of the financing by the government of Japan to the Kenyan government and was to be operated by a private operator through a competitive bidding.

The process was launched by the end of 2014 and attracted a large number of internationally recognised operators unfortunately the tender was cancelled early 2016 by the government before the end of the process.

The envoys have since distanced themselves with the Merchant Shipping Act section 16 which disallows shipping lines from operating the terminal and instead giving priority to KNSL and MSC.

In the agreement, MSC will partner with KNSL to run the Sh27 billion CT2 terminal at the port of Mombasa which currently hosts berth 21 and 22 while two other berths, 23 and 24, are more than 60 per cent complete. The modernised terminal is positioned strategic as it connects to the Standard Gauge Railway which currently ferry more than 1200 twenty feet equivalent units daily from the port of Mombasa to the Inland Container Depot in Embakasi.