Battle goes on over who gets the port cash

The battle for control of Mombasa port will not stop soon, with local leaders furious that the region’s major resource will not generate revenue directly for the county when the devolved government takes shape next year.

The leaders, who opposed some sections of the new Constitution during the referendum, wanted the port to be owned by the town council, with all its income remaining in the county, said former Kisauni MP Anania Mwaboza.

“Under the new Constitution, the port is considered as one of the national assets and Mombasa residents will be shortchanged in the sharing of the revenue it will generate,” he said.

Section 209 (5) of the new Constitution states that taxation and other revenue raising powers of a county shall not be exercised in a way that prejudices national economic policies, economic activities across the county boundaries or the national mobility of goods, services, capital or labour.

Mombasa port is the gateway to East and Central Africa, with about 70 percent of Uganda’s cargo passing through it.

Past attempts by the town council to levy a fee on cargo have not been successful.

The area’s MPs say this is made worse by the planned privatisation of the port, which local politicians claim will sell the port to outsiders, leading to huge job losses.

Although the politicians seem to have recorded a victory against privatisation, the growing volume of cargo might not allow this to hold for long. The port currently employs more than 7,000 dock workers.

“Due to the capital constraints, the Government will not be able to provide the resources required to create capacity to handle the growing volumes of the cargo,” Transport minister Amos Kimunya said earlier this year.

The proposal to privatise Berths 11-14 was approved by Cabinet in December last year.

CPCS Transcom was awarded consultancy services for the proposed sale.

Also to be privatised was the stevedoring services that employ more than 70 percent of the dock workers and the Eldoret Internal Depot.

Berths 11-14 were originally designed to handle general cargo but due to the growth of container cargo, which has recorded an annual increase of more than 10 percent in the last seven years, there were plans to handle container vessels using the ships’ gear.

The Government intended to convert these berths into a fully fledged container terminal with modern container handling equipment such as ship-to-shore gantry cranes, said the Kenya Ports Authority managing director.

This required physical restructuring of the berths including strengthening of the quay to sustain the weight of the cranes. The terminal would then be leased to a private operator while KPA remained the landlord.

Recently, when the Dock Workers Union threatened to go on strike to compel the Government to degazette the planned privatisation, Mr Ramadhan Kajembe, MP for Changamwe, Mr Masoud Mwahima, MP for Likoni, and Mombasa mayor Ahmed Modhar went to the port and said they had responded to calls by workers over failure by the management to clear the air over the matter.

The Dock Workers Union has been demanding that KPA clarifies privatisation plans that were early this year put on hold.

The recent threats were triggered by Mr Kimunya’s hints that privatisation would in fact take place.

“If the port is sold, more than 3,000 workers will be retrenched,” the DWU general secretary Simon Sang said. Most of the workers come from Likoni and Changamwe constituencies.

Growing opposition to privatisation is seen as a major impediment to the urgently needed expansion of the port, which last year handled over 19 million tonnes against an installed capacity of 20 million tonnes.

This was 50 percent more than in 2009, and the figure is expected to hit a new high this year.

In spite of some improvements, the port is still underperforming because reforms have not kept pace with increases in cargo.

As a result, the port has lost significant business, according to a World Bank report that described it as East Africa’s most important asset.

Business to Dar es Salaam, the largest market for trans-shipment was stopped in 2007 due to congestion at the terminal container yard and will only resume when extra cargo handling capacity is created.

“Absence of reforms and new investments will result in increased vessel delays, port congestion surcharge and higher costs to customs,” said the report, Running on one engine: Kenya’s uneven economic performance with a keen focus on port of Mombasa.

The existing container terminal was designed to handle 250,000 20ft units but last year it handled about 700,000.

The report, released last June and opposed by a section of the leaders, said there needed to be clarification of a full timetable to make Mombasa a landlord port — where frontline cargo handling is handled under concessions to private enterprise — as well as identification of the roles of the KPA and private sector.

Otherwise, the port could become an impediment to economic growth in the entire East Africa region whose economies are projected to grow by more than five percent in the coming years.

The port is today relying on conventional berths to handle container cargo, using Berths 5-7, 11 and 13-14 to reduce the traffic in container vessels, shifting delays to conventional cargo berths, according to Mr Joseph Atonga, the port’s operations manager.

But the World Bank report cited the need to undertake institutional, regulatory and legal reforms before undertaking reforms and investments at the port.

“Private investment, which would lead to new local jobs, greater port efficiency and a positive impact on growth in the region have been thwarted by vested narrow interests seeking to maintain the status quo,’’ said the World Bank.

On job losses, which the union estimates will be over half the current workforce of 7,000, the report states: “And whilst unions and their workers might legitimately fear downsizing, this should be viewed in the context of the government plans to extend the port and the situation on the ground today.”

Port users have also opposed privatisation with key players warning that it was risky carrying out the exercise in the absence of a sound legal framework. They spoke when CPCS Transcom sought their views before a final report on privatisation was completed.

Mr George Kidima, a representative of Uganda, said that KPA and Kenya Maritime Authority have not created sufficient regulatory mechanisms to protect the industry from unfair business practices and importers were already paying huge unjustifiable charges to the already privatised sectors such as Container Freight Stations (CFSs).