How Duale bill puts KPA at risk of losing Mombasa port

Kenya Ports Authority is likely to lose control of Mombasa port's second container terminal if a Bill amending the shipping law is passed.

The Statute Law (Miscellaneous Amendment) Bill, 2019, seeks to give the Transport Cabinet Secretary powers to exempt a government entity or enterprise from adhering to provisions of the Merchant Shipping Act, 2009.

The Act bars shipping lines from operating a sea port. If proposed law passes it is likely to give way for Kenya National Shipping Line (KNSL) to operate and maintain the Sh30 billion terminal.

However, a committee of Parliament has flagged the plan to take over the KPA terminal, saying KNSL is cash-strapped and tunable to revitalise port operations.

KNSL is already in talks with KPA on the takeover plan, a matter that is currently the subject of a probe by the Public Investments Committee chaired by Mvita MP Abdulswamad Nassir.

While questioning KPA officials led by managing director Daniel Manduku last Tuesday, the MPs warned that Kenya would lose big if the plan is implemented.

The proposal would result in the creation of a special purpose vehicle to run the KPA facility – the largest in the country — occasioning a possible loss of revenue earned by the ports authority.

Mediterranean Shipping Company (MSC), an Italian firm, has been tipped to run the terminal if the proposal sails through.

The Bill sponsored by Leader of Majority Aden Duale seeks to give the Transport CS powers to exempt a government agency or enterprise from the provisions of the Shipping Act.

The import of the proposed legislation is that the Transport CS will have the power to engage any company to deliver the objects of the proposed takeover.

KNSL was formed in 1989 under the Act as the sole national carrier with the government, through KPA, as the majority shareholder.

A source intimated to the Star that the proposed legislation is a way of clearing the path for the Transport CS to involve the Italian company in port operations.

KNSL's role was to control cargo passing through the port of Mombasa, a slot that is now held by Maersk Shipping Line which handles at least 40 per cent of cargo.

Manduku said during the April 2 hearing that KPA was instructed, following a Cabinet resolution, to initiate talks with KNSL on the plan.

“It was a policy decision to give KNSL capacity in line with the blue economy objectives. We were only served an MoU entered between MSC and the Transport ministry, which arose from the Cabinet resolution,” Manduku said.

KPA said MSC has already shown goodwill by taking some KPA staff on board and that the shipping line will also train KPA crew with a view to improving the port’s output.

The question MPs want answered is whether MSC was the only company that could get the contract and whether there was any public and stakeholder participation.

MSC has about 20 per cent shares in KNSL. The agreement was meant to revive the moribund shipping line.

KPA used to own over 80 per cent shares in the national shipping line (KNSL), more of which it is offloading to MSC, hence likely to lose control of the port.