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Hiving off terminal from KPA to new entity KNSL smells bad

Wednesday December 19 2018

Containers at the Mombasa port.

Containers at the Mombasa port. You don’t wake up one morning and decide that you are hiving off part of the KPA — transferring functions and responsibility to another entity — even where it is clear that the parastatal inheriting the functions is not too famous for efficiency in service delivery. PHOTO | FILE | NATION MEDIA GROUP 

Jaindi Kisero
By Jaindi Kisero
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I gather that a plan by the Ministry of Transport to remove the management and control of the second container terminal from the Kenya Ports Authority and hand over this relatively new facility to the State-owned Kenya National Shipping Line is at an advanced stage.

What a dumb idea! We all know, the KNSL neither has the capacity nor the knowledge and experience to run a container terminal.

How do you hand over management of your top-of-the-range Mercedes Benz to a jua kali garage?

A port is a very critical piece of national infrastructure.

CUSTOM DUTIES

Whether it is efficient or not has major implications on the performance of the economy.

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In Kenya, 30 percent of national government revenues come from Customs duties.

And ports are the means by which contraband, ranging from drugs to ivory, escape to the rest of the world.

I don’t understand why policymakers — and people in authority — display such a casual attitude even when it is clear that the decisions they make have far-reaching implications.

HIVING OFF

You don’t wake up one morning and decide that you are hiving off part of the KPA — transferring functions and responsibility to another entity — even where it is clear that the parastatal inheriting the functions is not too famous for efficiency in service delivery.

In any event, you must follow the laws governing privatisation and disposal of public assets.

A decision as drastic as hiving off such a big part of the operations of KPA to KNSL may require parliamentary approval.

I called up the Cabinet Secretary for Transport and Infrastructure, Mr James Macharia, to seek an explanation and background on the issue, even as I tried to understand why things were being done in such a hurry.

His response was swift and terse: “Jaindi, just report that I said I had no comment.”

Yet I have my own conspiracy theory. I see the handiwork of shadowy characters — who, having failed to wrestle management and control of the facility in an abortive attempt three years ago to concession it — have come up with a new and more elaborate scheme.

Here is a bit of background and history.

REFERENCE PORT

All along, the plan was that, with the new container terminal — built by the Japanese and handed over to the government — Mombasa would reposition itself as the reference port of the Indian Ocean by consolidating its leadership over Djibouti, Dar es Salaam and Maputo.

The second container terminal was going to be critical because it would double the capacity of the port to allow larger container vessels to dock.

We were going to have a high-performance port connecting to the standard gauge railway to form a fully integrated transportation chain and corridor running all the way to Kampala.

This is why the government decided that, instead of having the new facility managed by KPA, it would be privatised and handed over to an international port operator to run it under a 30-year concession.

BIG NAMES

And when the tender was put out, all the big names in international port operations put in very competitive bids.

The Chinese group PSA International, which had partnered with a local group Multiple Hauliers, emerged tops, followed closely by Dubai World, Cosco Pacific and Paramount Bank (92.98) of Singapore, Siginon Group of Kenya.

But as it was to turn out, tendering was cancelled — against the backdrop of intense lobbying by powerful peddlers of political influence.

In a new twist, many months later, Dubai World pulled a rabbit out of its hat.

It was to emerge that the United Arab Emirates (UAE) had signed a bilateral agreement to lend Kenya $275 million in exchange for giving the running of the Japanese-funded facility to DP World.

DUMBED DOWN

It is amazing, indeed, how we have dumbed down to the level where we are now saying that this modern facility should be handed over to KNSL.

I am not against the idea of reviving KNSL. Just the other day, the Cabinet announced intentions to support this State-owned company to a level where it can play a strategic role and protect national interest in the maritime industry.

President Kenyatta even witnessed the signing of an agreement between KNSL and Mediterranean Shipping Company (MSC), the world’s second-largest shipping line in terms of container vessel capacity.

I gather that the government also plans to bring the operations of the Government Coast Agency — currently under the National Treasury — under KNSL.

Bandari College, currently owned by KPA, is also to be brought under KPA.

These may be good intentions. But let us not force KNSL to bite more than it can chew. Let KNSL first establish itself in feeder services. The behemoth we are trying to create won’t work. Period.

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