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Economy

State plans law change to ease KPA Sh30bn terminal takeover

Cranes at Mombasa Port
Cranes at Mombasa Port. FILE PHOTO | NMG 

The government is changing the law to smoothen the way for the takeover of the Sh30 billion Kenya Ports Authority second container terminal by the Kenya National Shipping Line (KNSL) and a private foreign entity.

If MPs approve a new Bill, KNSL will take over management of the terminal in Mombasa in a deal that is similar to the proposed takeover of management of Jomo Kenyatta International Airport by struggling national career Kenya Airways.

The proposal would result in creation of a special purpose vehicle to run the Kenya Ports Authority (KPA) facility, whose first part was opened in September 2016 and can handle about 550,000 twenty- foot containers per year.

The government has tabled amendments to the Merchant Shipping Act, 2009 to empower the Transport Cabinet Secretary to exempt government entities or enterprises from being barred to operate the terminal.

“Notwithstanding any provision of this Act, the Cabinet Secretary may, on the recommendation of the Authority, by notice in the Gazette and subject to such conditions as may be appropriate, exempt any government entity or enterprise from any provision of this Act where such exemption is in public interest and in furtherance of government policy,” Section 4 of the Statute Law (Miscellaneous Amendment) Bill, 2019 states.

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The law prohibits a shipping line from operating a port terminal.

The Sh30 billion terminal was financed by a loan from Japan through the Japan International co-operation agency (JICA), and Kenya will repay the loan over a 40-year period.

The new terminal ramped up Mombasa’s existing annual cargo handling capacity from 1.05 million containers to 1.6 million.

Plans to have a concessionaire operate the first phase of a second terminal collapsed following tender hitches.

The government last year approved the revival of the dormant KNSL to handle government cargo and vie for private business.

The foreign shareholders in the dormant shipping line include Mediterranean Shipping Company and MS Oceanfreight Ltd.

Multinational shipping lines have been angling for control of the KNSL as the government looks to revive the struggling parastatal.

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