International firms have shown interest in the management of Mombasa port even as it emerges that a recently enacted law denies them a stake in the venture. The government has already started the process of privatising the port. A study to determine which sections of the facility should be handed over to private hands is in the offing. The move is expected to increase efficiency at the port, which serves five countries in the region.
Although the firms interested in bidding are expected to have huge capital outlays as port management is a capital intensive affair, the Merchant shipping Act (MSA) bars shipping lines from involvement in any other business in the country’s transport and logistics supply chain, a provision which could lock them out.
“We still don’t understand why the section was inserted at the last minute. One could read mischief in the sense that someone wanted to lock out shipping lines from competition in the port privatisation tendering process,” said a manager of a shipping line who did not want to be named.
The Privatisation Commission of Kenya has already started the process of identifying a consultant who will advise the government on which part of the port should be privatised.
“The firm would advise us on which areas should be privatised because, as you should realise, the government has privatised some of its parastatals yet we don’t get the desired efficiency,” said Transport minister Chirau Mwakwere.
DP World has already indicated that it would like to take over the management of the Mombasa container terminal if it goes up for privatisation.
Mr Anil Singh of DP World reportedly said that the firm was awaiting the completion of a study into the future of the port, by Kenya Ports Authority (KPA), which would propose the extent of private sector concessions on offer.
“We would want to be involved sooner rather than later. We have been waiting for an indication,” said Mr Singh.
The debate over whether to transfer control of Mombasa port to a private operator has raged for at least five years. But the government doesn’t seem to have reach an agreement on the issue.However, it remains to be seen whether this will translate into the introduction of the port/landlord model of management. One of the government’s main challenges will be to decide whether it offers concessions for both the existing KPA terminal and the new Kipevu West Container Terminal (KWCT), which is due for completion in 2015.
The option of allowing KPA to retain control over the existing terminal, while acting as the landlord of its main competitor, KWCT, might be unworkable according to some experts.
Maersk-Kenya, a subsidiary of APM Terminals, has in the past also indicated its interest to bid for berths. However, DP World’s interest could result in strong competition for any port privatisation tender.
The Dubai based company already operates port facilities on all sides of the Arabian Peninsula and has recently taken over the Dakar container terminal in Sénégal, West Africa. Mombasa could fit in well with the company’s expansion agenda. Stakeholders in the maritime industry have been asked to support the recently enacted Merchant Shipping Act 2009, to boost trade in the region. Transport minister Chirau Ali Mwakwere said the Act will spur economic growth, given that 95 per cent of international trade is maritime-based.
Speaking during the official opening of a regional stakeholders meeting on the establishment of consultation machinery on maritime transport services in Mombasa, Mr Mwakwere moved to allay fears among a section of shipping lines that the new Act will lock out foreigners.
“It is regrettable that some stakeholders misinterpreted this Act as one enacted to restrict foreign direct investment in the maritime transport sector. This is not so. On the contrary, the government through my ministry, encourages collaboration between local and foreign firms.”
The Act does not prohibit direct foreign investment in any segment of the logistics chain. It addresses the issue of vertical integration of the logistics chain where a few dominate the sector by applying pricing practices that limit the entry of new participants, he added.
The Act does not prohibit direct foreign investment in any segment of the logistics chain. It addresses the issue of vertical integration of the logistics chain where a few dominate the sector by applying pricing practices that limit the entry of new participants, he added.
The minister said the government had mandated the Kenya Maritime Authority (KMA) to monitor the efficiency and competitiveness of a transport logistics supply chain required in Kenya’s maritime industry.
