SURRENDER

State bows to pressure, opens new talks on use of Naivasha dry port

Private sector to propose SGR charges to Naivasha

In Summary

•Kampala has insisted use of Naivasha ICD should be optional as companies remain tied to existing logistics contracts.

•Shippers Council of Eastern Africa(SCEA) says private sector is expected to avail proposed SGR freight charges in the next two weeks.

A reach stacker loads containers onto a truck at the newly launched Naivasha dry port.
A reach stacker loads containers onto a truck at the newly launched Naivasha dry port.
Image: / COURTESY

Kenya has initiated fresh talks with the private sector and neighbouring user countries to agree on the stalemate over the use of the Naivasha Inland Container Depot

A meeting between the  transport ministry and the private sector led by the Kenya Private Sector Alliance (Kepsa), held on Monday, agreed to address  the concerns raised over the use of the facility for transit and cargo destined to Western Kenya region.

Transport Cabinet Secretary James Macharia last month directed that all transit cargo, effective June 2, be railed to Naivasha ICD before being cleared to neighbouring countries, with the facility targeted as the main collection centre.

 

Naivasha will be a transshipment centre,” Macharia told the Star in an interview on May 27,This is our position and we are going to implement.”

The move was however met with protests by Uganda , the biggest destination for transit cargo through the Port of Mombasa, with both its government and private sector seeking optional use of the facility.

“Our considered opinion remains that the use of Naivasha ICD should remain optional,” Uganda's Works and Transport minister Edward Katumba said in a letter to his Kenyan counterpart, dated June 4.

Mukwano Industries, one of Uganda's biggest importers through Mombasa, cited contractual obligations between shippers, importers and shipping lines that would be breached if its cargo is forcefully railed to Naivasha.

“If our port of discharge is Mombasa and on carriage is on consignees' risk and account, I wonder how you can unilaterally rail our containers to Naivasha without our consent,” managing director Alykhan Karmali said in a letter to the Kenya Ports Authority.

The firm warned it would seek legal recourse and hold Kenya liable of all losses, delays and damages incurred as a result of the directive.

Concerns raised by Kenyan players are around connectivity to the facility and cost of transport by rail compared to road.

 

Uganda's position has pushed the Kenyan government back to the drawing board on the use of the new facility, which complements the Port of Mombasa and the Inland Container Depot-Nairobi.

Yesterday, the Shippers Council of Eastern Africa(SCEA) which represents regional logistics firms and international traders confirmed a fresh position is being sought.

The council's chief executive Gilbert Langat, said private sector is expected to avail proposed SGR freight charges in the next two weeks for consideration.

“People have existing contracts so there is no way the government can force private sector to use specific mode of transport,” Langat said, “ We are happy with the infrastructure the government is providing but we must engage private sector on the use.”

SCEA has been backed by the Kenya International Freight and Warehousing Association which through national chairman Roy Mwanthi, has called on government to make rail haulage cheaper than road to attract traders to the new facility.

Currently, it costs $600 (Sh63,813 ) and $850( Sh90,402 ) to rail a 20 foot and 40 foot container, receptively, to Naivasha.

An additional $1700 (Sh180,804) to $2,000(Sh212,710) is required to truck the cargo to Kampala for instance, bringing total cost to $2,850( Sh303,112).

A direct haul by road costs an average $2,300 ( Sh244,617).

“Within the next two weeks, we should be able to come up with a favourable environment that we all accept,” Langat said.

This means neighbouring countries will continue clearing and collecting their cargo from the port city of Mombasa, and use the Standard Gauge Railway(SGR) on optional basis.

Uganda accounts for 83.2 per cent of transit cargo through the port of Mombasa. South Sudan takes up 9.9 per cent while DR Congo, Tanzania and Rwanda account for 7.2 per cent, 3.2 per cent and 2.4 per cent respectively.

The Kenyan government is keen to use SGR to Suswa which reduced the 1,144 kilometres road stretch between Mombasa and Kampala by about 527 kilometres, easing congestion on the roads and the Port of Mombasa.

It is expected in improve cargo turn-around time, boosting growth of industries, agricultural sector and businesses.