CS nominee's firm blocked from building grains terminal at Mombasa port

A port firm linked to a Cabinet Secretary nominee has dealt a major blow in its quest to operate a new grain bulk terminal at the port after the Supreme Court suspended its tender awarded by Kenya Ports Authority.

Judges led by Deputy Chief Justice Philomena Mwilu, Mohammed Ibrahim, Isaac Lenaola, William Ouko, and Smokin Wanjala issued orders barring Portside Freight Terminals Limited from developing a grain handling facility at the Port of Mombasa pending the determination of an appeal filed by Busia Senator Okiya Omtatah and Dock Workers Union.

"Pending the hearing and determination of the consolidated appeal herein, a conservatory order is hereby issued restraining Portside Freight Terminals Limited, Portside CfS Limited, and Heartland Terminals Limited from constructing and developing a grain handling facility and island berth at G-Section, Area belonging to Kenya Ports Authority, Mombasa according to the license granted by the KPA on August 2, 2021," the Supreme Court ruled.

Omtatah and Dock Workers Union sought the orders arguing that KPA has failed to undertake the procurement as required by the Constitution and provisions of the Public Procurement and Asset Disposal Act.

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While allowing the plea by Omtatah to halt the development of a second-grain bulk handling facility at the Port of Mombasa, the judges held that should Portside Companies proceed to implement the project, the appeal would be rendered nugatory.

"In any event, at this stage, we are of the view that a conservatory order will, not only preserve the status quo but also save Portside Companies themselves from nugatory expenditure should the appeal succeed.  The inconvenience and delay that may be occasioned to them can be compensated by an award of costs," Mwilu led bench stated.

However, the Supreme Court directed the case to be heard on a priority basis since the dispute has been pending in the courts for nearly three years.

"To obviate any further delay and expense to Portside Companies, and in view of the importance of the project in question to the economy of this country, it is directed that the Registrar shall expeditiously finalize case management procedures for the consolidated appeal to be listed for hearing without delay," they directed.

In his appeal, Omtatah wants the apex court to overturn the Court of Appeal decision that gave Portside Freight Terminals Limited the greenlight to construct a second facility at the port.

Omtatah says the appellate court judges erred in finding that awarding of the contract to Portside was not discriminatory and that KPA and the Treasury did not breach the constitution in tapping the firm

The Senator contends that in the award of the tender, there was no public participation as the KPA Board of Directors, without any authority, reviewed and approved the grant of license to Portside Freight Terminals.

 "The procurement process was discriminatory to four companies namely Kilindini Terminals Limited, Grain Terminal Limited, Kapa Oil Refinery, and Africa Ports and Terminals and the appeal is not frivolous since it raises vital and arguable points of law on the violation of the Constitution and other procurement laws," he told the five judges.

Omtatah claims KPA board of directors, acting ultra vires, without authority and in glaring violation of the law and procedure, purported to review and approve the grant of way leave and license to operate a second bulk grain handling facility at the port of Mombasa to Portside Freight Terminals Limited.

"The KPA Board of Directors does not have the mandate to procure goods and services. That function is reserved for the KPA's management," Omtatah said in his court papers.  

It is said that KPA decided to use the Specially Permitted Procurement Procedure under the Public Procurement and Asset Disposal Act, 2015, to single source and award a licence to Joho's firm.

“It is clear that KPA and the CS Treasury employed the use of Specially Permitted Procurement procedure to avoid the competition of bidder and is being applied in favour of Portside Freight Terminals Limited, Omtatah said.

According to his court papers, the Senator says that pursuant to the public procurement laws KPA failed to invite bidders or tenderers to submit their applications for consideration for the development of the second bulk grain handling facility

"That the procurement process employed by the respondents (KPA and CS Treasury) does not meet the minimum threshold established under Article 227 of the constitution that requires that when a state organ or any other public entity contracts goods or services, it shall do so in accordance with a system that is fair, equitable, transparent, competitive and cost-effective," Omtatah argues.

Further, Omtatah argues that conditions for the use of Specially permitted Procurement Procedures while awarding the tender does not exist.

"The direct procurement is being done to avoid competition by favouring one firm against six others which made proposals to develop the facility at either Dongo Kundu or at  Lamu ports," Omtatah informed the court.

This meant that the other party's proposals were ignored and never considered in light of the adopted use of the Specially Permitted Procurement Procedure. This unfairly locked them out of the procurement process.