• Plan is to create special purpose vehicle to operate Sh30 billion container terminal built with funding from Japan.
• Deal between KPA and Mediterranean Shipping Company is subject of probe by Public Investments Committee.
Image: FILE
Kenya National Shipping Line has distanced itself from the proposal to hand over Mombasa port's second container terminal to a private entity.
Acting KNLS managing director Joseph Juma said the entity has only been designated a technical role but is not part of the negotiations.
The deal between Kenya Ports Authority and Mediterranean Shipping Company is now the subject of a probe by the Public Investments Committee.
The plan is to create a special purpose vehicle (SPV) to operate and maintain the Sh30 billion container terminal built with funding from Japan.
But Juma said the negotiation has not reached KNSL and is pursuant to the MoU between KPA and MSC as steered by the Transport ministry.
“KNSL was not part of the joint committee that signed the MoU. It was reached after a Cabinet resolution which we were only briefed on,” he told the Public Investments Committee.
The committee chaired by Mvita MP Abdulswamad Nassir has begun investigations into whether due process was followed in the signing of the agreement.
The lawmakers held that since the Merchant and Shipping Act, 2009, bars shipping lines from operating a port, the MoU amounts to an illegality.
Kiminini MP Chris Wamalwa poked holes in the plan, saying KNSL’s books of accounts are unattractive and is not suited to take up operations currently bestowed on KPA.
“Who initiated this? Who is behind this? Was there any public participation? Is it not confirming our fears that the port is being grabbed? Shouldn’t the parastatal be closed down?” the lawmaker asked.
Juma told the MPs the agreement was discussed at shareholder level and that KNLS got in as the technical team.
“The status of the company staged the need for restructuring. A consultant has been hired to steer the negotiations. We are doing this in consultation with the office of the Attorney General,” he said yesterday.
However, the legislators raised fears that the deal seems sealed and that the actors are only working backward to give it legal backing.
They cited an attempt to amend the Merchant Shipping Act as part of the steps being taken by the proponents of the takeover to solemnize the MoU.
The Bill sponsored by Leader of Majority Aden Duale is seeking to give the Transport CSpowers to exempt a government agency or enterprise from the provisions of the Shipping Act.
But Juma maintained the takeover is among strategies being put in place to make the port vibrant in line with the need to grow the blue economy.
MPs probing the transaction demanded an explanation on whether the same was tendered in the wake of revelations that there are 14 shipping lines operating in the Kenyan waters.
“Have we considered getting one competitively? What was considered when MSC – an Italian firm - was coming in?” Nassir asked.
Kinangop's Zachary Thuku sought explanation on why KNSL has not implemented the strategic plan 2016-2021 three years later.
Juma said: “For a shipping line, you must have the capacity. We cannot implement the SP without capacity. It will be revised after issues of cashflow are sorted out.”