Inside rage over government's plan to lease out terminals at Mombasa and Lamu ports

Several berths at Mombasa and Lamu ports may soon be placed in the hands of private operators following the push by the government to lease the terminals for 25 years.

Debate is raging on the plan to roll out the 25-year leasehold for berths 11 to 14 and berths 16 to 19 at the port of Mombasa and all three berths at the port of Lamu.

On March 4 this year, Kenya Ports Authority (KPA) managing director Captain William Ruto called a public participation forum at the Pride Inn Paradise in Mombasa county, where port stakeholders aired divergent views on how the Public-Private Partnership (PPP) should be implemented.

The government has been seeking the involvement of private investors in a bid to inject efficiency and competitiveness into the two ports following a recent congestion.

Car Importers Association of Kenya (CIAK) national chairman, Mr Peter Otieno, opposed the privatisation of port operations said the problem of the ports was not a lack of management capacity but the need to support infrastructure improvement and equip the facilities.

Kenya Ships Agents Association (KSAA) suggested that the private operators should run the selected terminals together with KPA to ensure the public is not short-changed in the deal.

Shippers Council of Eastern Africa (SCEA) welcomed the PPP plan but said it would keenly watch its implementation to ensure shippers are not disadvantaged.

In a petition addressed to Captain Ruto, Otieno claimed privatisation was a short-term fiscal fix that poses long-term risks to national sovereignty and economic stability, and hence his association objected to the entire government plan.

Otieno, who is a clearing and forwarding agent, argued that handing over primary entry points to private international entities will grant them control over the country’s most sensitive economic gateway to Kenya and the East and Central Africa region.

He argued that port throughput figures have consistently shown growth, and hence, the port management only needs modern tools and improved infrastructure to run the ports.

“We wish to register our strong objection to the proposed PPP model for specified berths. Our position is that the current challenges at the port are not due to management incapacity but rather a lack of supporting infrastructure and modern tools. Privatisation is a short-term fix that poses long-term risks to national sovereignty and economic stability,” he argued.

Otieno argued that private operators prioritise profit margins over national security protocols, while maintaining the ports under government control ensured the safety of the people, and the integrity of imports will remain a priority.

He noted that top performing ports like the Port of Singapore and port of Dubai are run by the government and hence Kenya should not let is ports go into private hands.

KSAA chief executive officer Mr. Elijah Mbaru said the private operators should work closely with KPA to ensure the new plan strictly complies with the agreements and benefits Kenyans.

Mbaru said the deal should not disadvantage Kenyans as was the case in Djibouti, where a similar agreement left a bitter taste in the mouth.

“The PPP model should seek a reliable port operator like the Port of Singapore Authority (PSA), who should work closely with KPA to ensure Kenyans are not short-changed,” he stated.

According to Mbaru, berths 11 to 14 and berths 16 to 19 should be run by two operators each to ensure there is no monopoly.

“We do not support an arrangement where all the berths are handed over to one terminal operator. We want them to be run efficiently to raise cargo volumes and create jobs,” he said.

SCEA chief executive officer Mr Agayo Ogambi said the PPP envisaged by KPA was most welcome against the backdrop of continued increases in port throughput averaging over 10 percent annually, demands for capital towards resourcing the port to meet the demands and challenges in berth productivity, among other requirements.

Ogambi argued that the current KPA strategy already incorporates a landlord port model and hence the decision was in fulfillment of the strategy and aspiration of the future of port management.

"That KPA shall still be managing some berths will not only create a pricing balance but also provide options to shippers. Importantly, the PPPs should be undertaken transparently, ensuring public and national interests are taken into account. Key area of concern is job losses," he stated.

He added," PPPs must go beyond capital raising. It must deliver efficient and competitive services and contribute towards employment creation and economic development."

The government is pursuing the privatisation of berths through 25-year leaseholds to improve efficiency and competitiveness, with KPA set to adopt a landlord-type model.

The arrangement is set to attract international investors to operate these facilities despite various groups challenging the process, including the Dock Workers Union (DWU), which fears the loss of jobs. 

The privatization initiative is part of a government strategy to modernise, upgrade, and increase the capacity of Kenyan ports.