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Growing opposition to privatisation is blocking urgently needed expansion of the port of Mombasa which this year has exceeded its cargo handling capacity.
Growing opposition to privatisation is blocking urgently needed expansion of the port of Mombasa which this year has exceeded its cargo handling capacity.

Last year the port handled over 20 million tonnes of goods, or 50 per cent more than in 2009, and this figure is expected to hit a new high this year.

Despite some improvements, the port is still underperforming because reforms have not kept pace with growth in cargo volumes, maritime experts say.

As a result the port has lost significant business as a trans-shipment facility, according to a World Bank report that describes the port as the East Africa’s most important asset.

Largest market

Trans-shipment business to Dar es Salaam, the largest market for this kind of activity, was stopped in 2007 due to congestion at the terminal container yard.

“Absence of reforms and new investments will result in increased vessel delays, port congestion surcharge and higher costs to customs,” says 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 20-foot units (Teus), but last year it handled about 700,000 Teus. The volume of containerised cargo has been growing bymore than 10 per cent annually since 2005.

The report released last June says there needs to be clarification of a full timetable to make Mombasa a landlord port – where frontline cargo handling is concessioned to the private sector – as well as identification of the roles of the Kenya Ports Authority 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 over 5 per cent this year.

Among projects earmarked for expansion is the extension of Berth 18, which will take 24 months and was supposed to have been carried out in 2006, according to port officials.

Berths 18 and 9 cannot accommodate three vessels calling at the port due to the growing tendency of shipbuilders to make longer vessels. This has led to delays, and last year MSC shipping line threatened to slap the KPA with a congestion surcharge due to inefficiencies at the port that led to delays in securing a berth. The Vessel Delay Surcharge (VDS) can go as high as $50,000 (Sh4.1 million) a day.

Private sector

The second container terminal, being funded by the Japanese to a tune of Sh16 billion, will create an additional capacity of 1.2 Teus and will be fully operated by the private sector. The construction of the project was due to be completed more than two years ago.

Berths 11-14, initially constructed to handle conventional cargo and which now form part of the first phase of the planned privatisation, will be converted into a full-fledged container terminal with modern container handling equipment such as ship-to-shore gantry cranes.

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

The port master plan, which was revised in 2009, emphasised the role of private sector in the planned expansion with the port only serving as a landlord.

But the World Bank report cited the need to undertake institutional, regulatory and legal reforms before undertaking reforms and investments at the port.
Efforts to obtain comment from KPA management were unsuccessful.

“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,” noted the report.

On job losses, which Dock Workers Union secretary-general Simon Sang estimates will be over half the current workforce of 7,000 employees, the report says: “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.”

It is believed that the KPA workforce is already bloated, and a head count to flush out ghost workers is expected to begin on February 24.

Elections for secretary-general of DWU will be held before May, and those opposing Mr Sang see his stand on privatisation as a strategy to draw workers away from him.

A section of dock workers supporting privatisation are rallying behind former Wundanyi MP Mwandawiro Mghanga, who declared his interest in the position this week.

ODM and PNU legislators in the region have also opposed privatisation. The politicians see the process as a ploy to “rob” the Coast of its major source of revenue.

Speaking during a workers’ meeting two weeks ago, ODM MPs Hassan Joho (Kisauni), Ramadhan Kajembe (Changamwe) and Masoud Mwahima (Likoni) said that they would not allow the sale of the port to continue because it would impoverish their voters.

Institutional reforms

Kenya Shippers Council executive officer Gilbert Langat said the country has not created sufficient institutional reforms to guarantee efficient operations at a privatised port.

“Based on the Container Freight Stations experience, lack of regulatory measures may create inefficiencies at the port if privatisation is carried out in the current environment,” he said.

Kenya Transport Association chairman Paul Maiyo said the government has no business in port operations, adding that most of the successful ports in the world are operated by private players.

However, the government should identify operators who will bring maximum benefits to the country, he said.

“We should not see a situation where expatriates are brought to do jobs that can be done by Kenyans,” he added.

The Kenya Private Sector Alliance chief executive Carole Kariuki said the port needs to modernise its facilities to enhance efficiency and service delivery.

“The government may not have sufficient funds to complete this process, and hence the need for the private sector to step in to provide the much needed funds.”

Kenya International Freight and Warehousing Association chairman Hezron Awiti also supported privatisation, but said that it should be above board.

Kenya Ships Agents Association chairman David Mackay said, in principle, privatisation of the container terminal will improve efficiency at the port.