•KNSL was established in 1987 as the national seaborne trade carrier but collapsed under years of mismanagement and massive debt.
• Uhuru team sought to change the provision so that a Transport Secretary could authorise a shipping line to operate the port.
Image: PCS
President William Ruto’s administration has set sail on a journey to revive the Kenya National Shipping Line allowing it to operate the Mombasa Port.
President Uhuru Kenyatta began the efforts but not much progress had been made by the time he was leaving office following the August 2022 elections.
Progress was hampered by a law that prohibits ship owners from port operations such as clearing and forwarding, running terminals or container freight stations.
Ship owners are also currently barred from offering crewing agency services, operating a port facility and being a shipping agent or terminal operator.
The ship owners cannot also provide haulage services. operate empty container depots, or be general ship contractors under the current law.
The Uhuru team sought to change the provision so that a Transport Secretary could authorise a shipping line to operate the port.
But fears followed; concerned people said it would be dangerous to allow a Cabinet Secretary to issue such exemptions.
The issue was that an unscrupulous CS could prioritise private entities in the exemptions and put the Kenya Ports Authority out of business.
The new administration has thus proposed a law to remove the prohibitions that have prevented the take-off of the rebranded KNSL.
KNSL was established in 1987 as the national seaborne trade carrier but collapsed under years of mismanagement and massive debt.
In a Bill sponsored by Leader of Majority Kimani Ichung'wah, the Ruto administration has approached MPs to amend the Merchant Shipping Act by deleting the prohibitive Section 16 of the law, a move believed would give KNSL a lifeline.
“Amend Section 16 of the Merchant Shipping Act which restricts ship owners from providing the [said] services in the maritime industry,” the bill’s memorandum reads.
Ichung’wah says in the memo that the amendment “was on the request of the Office of the President following the declaration of the section as unconstitutional by the High Court in September, 2020”.
“….and to allow for the revival of the Kenya National Shipping Line,” the Bill reads. The committee on Transport is expected to review the proposal once Parliament resumes in February.
The development comes against the backdrop of the Ruto team indicating that it would reverse key port operations decisions by the Uhuru government.
Among those to be reviewed are decisions on the operations of the Sh26 billion Second Container Terminal at the Mombasa Port.
The Mediterranean Shipping Company (MSC) was handed the mandate of operating the terminal.
MSC came into play after its wholly owned subsidiary, Shipping Agencies Services Sarl (SAS), entered into a deal for joint control of the Kenya National Shipping Line with the Kenya Ports Authority.
MSC thus owns 47 per cent of the shipping line while Kenya Ports Authority controls the remaining 53 per cent, an arrangement that dock workers and other concerned agencies have opposed.
The groups protesting the move claim that the government secretly entered into the agreements with the foreign entities.
The fear by those opposed to the deal is that 47 per cent of earnings from the second container terminal would go to a private entity — MSC.
The other concern was that the mandate of the KPA to manage the port was being taken away in the restructuring.
KNSL shareholding has been a subject of political controversy, with the latest move likely to stir up the dust that was raised during Uhuru’s endeavours to revive the entity.
Former Auditor General Edward Ouko in his report on KNSL’s accounts for the 2017-18 raised queries on the shareholding.
He said financial statements for the previous year reported an uncertainty surrounding the company’s ownership and an ongoing reorganisation.
(Edited by V. Graham)