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KNSL NOT WHOLLY STATE-OWNED

Kenya Shipping Line won't run Mombasa Terminal 2

This came after the defeat of proposed amendment law barring shipping lines from managing a seaport

In Summary

• Public Investments Committee red-flagged the deal on grounds it would benefit private companies. 

• Nassir proposed that the shipping line suggested for takeover be 100 per cent state-owned. KNSL is 43 per cent is managed by MSC.  

The port of Mombasa
The port of Mombasa
Image: FILE

The government on Wednesday lost its bid to revitalise the Kenya National Shipping Line by allowing it to run the Sh30 billion Mombasa Port second container terminal.

This followed the defeat of the proposed amendment to the law barring shipping lines from operating a seaport.

The amendment to the Merchant Shipping Act 2009, if approved, would have allowed KNSL to operate and maintain the terminal, CT2.

 

In a Miscellaneous Amendment Bill by Majority leader Aden Duale, the government sought to introduce a provision that would have given a Transport CS powers to override the Act.

“Notwithstanding any other 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,” the proposal reads.

As this was being introduced, KNSL was already in talks with the Kenya Ports Authority on the takeover plan.

Ports Managing Director Daniel Manduku earlier told MPs that they were instructed, by way of a Cabinet resolution, to initiate talks with KNSL over the plan.

During reviews of accounts of the moribund shipping line, the Public Investments Committee chaired by Mvita MP Abdulswamad Nassir red-flagged the deal on grounds it would benefit private companies.

But the Transport committee chaired by David Pkosing reasoned that the takeover was okay as long as the CS is not granted powers to "abuse" the merchant law.

His team suggested that the proposed section be deleted and replaced with a provision that shall not apply to KNSL.

 

“KNSL has been in place from the 1980s and has not been doing business because of the law,” the Pokot South MP said.

Nassir, on the other hand, proposed the deletion and introduction of a line which specifies that the exempted shipping must be 100 per cent state-owned. 

“We agree that Kenya needs a vibrant shipping line for seafarers to get jobs, but not to the extent of selling our ports. One that is wholly owned by the government will guarantee earnings for Kenyans,” the Mvita MP said. The returns would put the country in a position to buy three ships annually.

KNSL shareholding has an Italian firm — Mediterranean Shipping Company — controlling a 47 per cent stake in KNSL. KPA owns 53 per cent.

Coast MPs, who put up a spirited campaign to defeat the Pkosing proposal, argue that should it pass, revenue will go to private firms.

They also opposed the job exchange plan, saying the 40 slots offered to Kenyans in the proposed takeover is a drop in the ocean.

“MSC has been promising Kenyans they will create 200,000 jobs in five years. How will this be possible when the firm has only created 38,000 jobs since its inception?” Kisauni MP Ali Mbogo asked.

Kikuyu MP Kimani Ichung’wa said at the House that the amendment as spelt would provide avenues for looting the parastatal.

But Duale said Kenya has to revitalise its shipping line to achieve the objectives of the Blue Economy.

He supported the Nassir amendment. “What Nassir is saying that the only time the provision will apply shall be when the shipping line is wholly owned by the government.”

The government had banked on the amendment to grow the maritime sector.

Maritime PS Nancy Karigithu told MPs on May 16 that a revitalised KNSL would save the state Sh305 billion annually in transportation charges paid to mostly foreign shipping lines.

“Oil products carried on ships chartered by KNSL will be able to enjoy priority berthing, faster discharge and therefore, nil demurrage,” the PS said.

She sought to ally the takeover claims saying, “KNSL is a subsidiary seeking to use CT2 to drive productivity. Furthermore, KNSL will be paying a lease fee to KPA.”

It is estimated that government cargo costs an average of Sh14 billion in freight charges per year while local destination charges cost another Sh34 billion.

In comparison, KPA currently contributes Sh3.2 billion in annual taxes and dividends which is far lower than what Kenya pays out.

(Edited by R.Wamochie)