Coast leaders are misleading public on port privatisation

Port of Mombasa.

In recent weeks, MPs from the coast region have used every public podium at their disposal to tell locals that the Port of Mombasa is on sale or is being privatised, secretly. 

In their vehement claims, they alarmingly charged that about 4,000 port workers would lose their jobs.

They have cast unjustified doubts on any proposed reforms of the maritime sector by even saying that a revamped Kenya National Shipping Line (KNSL) will be too inefficient and will cannibalise other port operations.

They purport that the professionals from the coast region are being “used to steal and sell Government properties”. In what is turning out to be a spirited campaign of misinformation for reasons only known to them, the legislators claim that KNSL has no capacity to run the Container Terminal 2, among other things.

The ignorant public would take MPs and a section of local trade unionists for their words, especially because they make privatisation sound like a very new thing yet those in the know will tell you that privatisation of certain functions of the port remains a common thing.

Now here is the truth. First, the KNSL is a State corporation, owned by the Kenya Ports Authority in partnership with investors. It was started in 1987 as a joint venture between KPA 74.8 (per cent), DEG 12.6 (per cent) and UNIMAR 12.6 (per cent).

In 1997, the three shareholders, through a competitive process, invited the Mediterranean Shipping Company (MSC) as a strategic partner. Presently, the shareholding structure is as follows: KPA (53 per cent), UNIMAR seven per cent, DEG seven per cent and MSC, through its 100 per cent owned subsidiary, seven per cent.  KNSL is a State Corporation and will remain so.

Secondly, there is no privatisation or selling of the Port. This is a Government to Government arrangement and does not involve the whole port but two Berths (20 and 21). KPA cannot sell to itself.

Third, what is envisaged are lease arrangements, where KNSL will pay a lease fee to KPA, pay for the JICA loan used to build the Berths and share gross revenue between KPA and the KNSL, and residual profits with the MSC subsidiary, as per their share ownership.

Fourth, in a lease arrangement, the principal can terminate the lease any time, if any terms and conditions are violated. Where is the fear coming from?

Fifth, this is not about the port, it is a value proposition for socio-economic growth of the 

Coast region and the country at large. The proposed KNSL venture will make Kenya a transshipment hub.

Big ships will call at the port, lowering freight rates by at least 20 per cent. It will increase volumes at the port, hence there will be no job losses or impairment of service for any port employee. KNSL will transship the cargo to the various ports in the Indian Ocean.