Mombasa port privatisation: Which side Uhuru?


H.E. President Uhuru Kenyatta Commissions Kshs 30 Billion Container Terminal at the Mombasa Port

Two years after Uhuru Kenyatta was accused of changing the original route of the standard gauge railway line to benefit his family in Naivasha, there are reports his family could be behind the push for the handing over of the second container terminal and one berth to the Kenya National Shipping Line where it has a huge stake.
During the 2017 elections campaigns, Raila Odinga claimed the SGR was diverted to Naivasha to benefit the family of the president.
Raila said the dry port and the line through which the SGR would pass was land owned by Uhuru and his family, noting that the original SGR route was meant to be constructed from Mombasa to Nairobi and then direct to Kisumu.
“When Mwai Kibaki and I gave nod to the project, it was meant to start from Mombasa to Kisumu but due to some poor leadership, it has been diverted to Naivasha,” he said while campaigning in Naivasha.
Phase 2A, which covers the extension of the line to the geothermal town of Naivasha was launched by Uhuru on September 2015. The new line is being undertaken by China Road and Bridge Corporation.
This time round the Kenyatta family is suspected to be behind the push for the handing over of the second container terminal and one berth to KNLS where it has a huge stake.
Already, there is behind the- scenes lobbying by global operators angling for cargo handling business at the port of Mombasa.

Raila and Joho when they opposed the Naivasha Dry Port

The developments come at a time it is emerging that an unknown group could be running the SGR through a special operating company registered in Dubai, Africa Star Railway Operation Company.
The company is majority owned by CRBC, but the other shareholders remain a mystery with details unavailable at the Registrar of Companies in Nairobi.
The company is now demanding a whopping Sh30 billion from Kenya Railway, which it terms as pending payments’ and a
penalty of Sh800 million for late payments.
The contract is said to have been orchestrated by top government officials and former Kenya Railways managing director Atanas Maina, who was suspended over corruption allegations.
Back to Mombasa port, campaigns by global port operators through their local agents are in top gear where they are painting KNSL as ‘inept’ or unable to run the terminal despite having strong political connections.
The operators prefer a concessionaire from outside the country.
The opponents of the KNSL deal also allege that this will give Mediterranean Shipping Company, second largest shipping line for Mombasa trade, undue advantage against rivals.
The Maersk Shipping Line which controls at least 40pc of cargo passing through Mombasa was also angling for the national liner but was elbowed out by MSC.
MSC has about 20pc shares in KNSL and in August last year, it signed a memorandum of understanding with the ministry of Transport to revive the moribund KNSL.
Last year on August 16, Uhuru witnessed the signing of an MoU between the ministry of Transport and Infrastructure and MSC for the revival of KNSL.

The MoU was signed by Transport and Infrastructure cabinet secretary James Macharia and Captain Giovanni Cuomo, the first vice president of MSC which is one of the leading global container shipping companies in the world.
The head of state welcomed the government’s partnership with MSC in the revival efforts, saying he expects the relevant teams to work with dedication and speed so that the shipping line is launched soon.
In reviving KNSL through the partnership with MSC, the shipping line is expected to once again become an active participant in international seaborne trade which accounts for a significant percentage of Kenya’s total trade.
KNSL was established in 1987 as the national carrier for seaborne trade but years of mismanagement led to its near collapse.
But strangely, KNSL boss Joseph Juma later informed the parliamentary committee that the agency was only involved “at the technical level” as the government signed an MoU with the Italians.
The Italian firm owns 20pc of the ailing KNSL and the proposed takeover would effectively give it sway in the terminal’s operations.
The public investments committee was questioning the deal on grounds that it will kill KPA operations.
The controversy on the takeover has been escalated by proposed changes to the law that would allow Transport cabinet secretary to circumvent a provision in the Act; barring a shipping line from running a container terminal.
The changes are contained in the statute amendment Bill 2019.
The government is pushing the take over on grounds that it will revive the debt-ridden KNSL and create jobs.
But the deal has run into headwinds after MPs rejected it.
Kenya Ports Authority workers have also asked the government to shelve plans to privatise some functions at the Mombasa port, saying the move amounts to transfer of public wealth to private hands.
Dock Workers Union general secretary Simon Sang says they are opposed to government plans to hand over running of the Sh27 billion second container terminal to KNSL in collaboration with the MSC.
Sang claimed the plan targeted the second container terminal that could rake in Sh10 billion profits annually but could end up in a concession with other shipping lines and take over the entire business in the port including the conventional cargo handling berths.
Kenya, which receives slightly over one million containers every year at its Mombasa port, does not have a local merchant shipping line.
The country relies on foreign merchant vessels which make approximately 1,800 calls annually at the Mombasa port, bringing imports and ferrying exports to market across the world.
The country therefore counts on collection of registration fees, a formality that confers artificial citizenship to a foreign ship, as part of its earning from the industry.
The cabinet secretary under whose docket the maritime affairs fall is mandated by the shipping Act 2009 to prescribe and vary the fees payable for ship registration.
Registration also enables a country to impose its code of conduct on the ocean-going vessel as licensing conditions compel them to observe all the laws and international conventions that Kenya has signed.
The politics surrounding the saga has seen DWU secretary Sang being accused of dragging the name of Kenya Ports Authority managing director Daniel Manduku into the privatisation of the second container terminal which was constructed at a cost of Sh27 billion.
Port Workers Welfare and Performance Group says when the government came up with the construction of the CT2 project Manduku was not KPA MD by then.
They pointed out that Manduku was not at the helm of KPA when Uhuru was commissioning the landmark project at the port of Mombasa.
Led by chairman Waweru Kamau, secretary Ali Khamis and organising secretary Peter Ouma, the trio asked Sang to channel his grievances to the relevant authority.
The PWWP officials said Manduku was not at the port during the construction and the opening of the second container terminal and wondered why his name should feature.
In a signed statement they cautioned the union spokesperson to respect Manduku being a civil servant and challenged him to face the government to get its stand on the privatisation of the facility.
The PWWP officials asked Sang to put his house in order and use his energy in serving the union members instead of overstepping his mandate.
They said the government has not issued any official statement regarding the privatisation of the facility.
They argued that there are serious issues affecting port workers which require Sang’s attention rather than him engaging in non-issues.
The officials reminded Sang the CT2 is a government facility and asset and urged him to tread carefully when discussing the issue in question.
In the signed statement, they urged the head of state to protect Manduku from external forces which are fighting his tenure.