A new container terminal project at the Port of Mombasa, in Kenya, which is nea- ring completion, risks being underused after the process of hiring an international independent operator was marred by controversies.
The Kenya Ports Authority (KPA) says it will now assume management of the second con- tainer terminal, which is scheduled for commis- sioning in March, after failing to secure an operator.
“The second container terminal will be completed in March as planed and the KPA will assume its management until such time as an international operator has been brought on board,” says KPA GM for corporate affairs Justus Nyarandi.
He adds that, owing to the problems facing the tendering process, the earliest that an inde- pendent operator can be hired is September.
The KPA has been unable to contract an independent operator after some companies that were in the running for a concession agreement to operate the $350-million terminal filed court cases, arguing that there were irregularities in the tendering process.
Port users are, however, sceptical about the KPA’s ability to operate the ultramodern terminal, which will have a capacity of 450 000 twenty-foot-equivalent units a year, raising fears the facility might end up being underused.
“Bringing on board an independent operator is meant to ensure that the terminal operates efficiently and at full capacity because the operator has to meet set targets. This will not be the case under the KPA,” says Shippers Council of Eastern Africa CEO Gilbert Langat.
A total of 19 companies responded to the tender to operate the first phase of the second container terminal at Mombasa, which was floated by the KPA in December 2014.
In April last year, the KPA shortlisted 12 companies and invited them to present their bids. The process, however, started to experience controversies when the National Treasury instructed the KPA to amend some rules, which was suspected by some to be an attempt to favour some bidders.
The alleged meddling by the National Treasury prompted some of the losers to file appeals at the Public Private Partnerships (PPP) Petition Committee, which, in December last year, ordered a re-evaluation of the bids.
The companies that filed appeals are Maersk, of Denmark; International Container Terminal Services (ICTS), of the Philippines; and a consortium of France’s Bollore and Japan’s Toyota Tsusho.
But, before the KPA could start the re-evaluation, Cosco Pacific, of China, filed a suit at the High Court to stop the process, arguing that it was unlawfully excluded from the re-evaluation, despite complying with all the requirements.
The company contends that it was not invi- ted to participate in the PPP Petition Commit- tee proceedings, whose decision affected it adversely.
“The applicant (Cosco) was never afforded an opportunity to be heard in the three petitions lodged with the Petition Committee,” states Cosco in its suit.
The court case means that the KPA cannot proceed with the tendering process.
The private operator will manage the con- tainer terminal under a 25-year concession agreement.
The operator will be expected to recruit and train staff, buy equipment and install systems to enhance efficiency, particularly on container vessels’ turnaround time, to ease congestion at the port.
The Mombasa port’s second container ter- minal, which is financed by the Japanese government, is designed to allow three Panamax vessels of up to 250 m in length to offload containers at any given time.
The terminal project is part of the $2-billion Kenya is investing over the next eight years to expand the port and improve its efficiency and competitiveness.