BY ANDREW MWANGURA
In the recent weeks, MPs from the Coast region have used every public podium at their disposal to tell the locals that the Port of Mombasa is on sale and/or being privatized secretly.
In their vehement claims, they charge that about 4,000 port workers are going to lose their jobs.
Without doubt, the leaders have cast uncertainty on any proposed reforms of the maritime sector and the revamping of Kenya National Shipping Line (KNSL) which they have termed as moribund and a conduit to cannibalize other port operations.
Many have been left baffled and stunned by their allegations that professionals from the region are being “used to steal and sell government properties” to the highest bidder.
In what is turning out to be a spirited campaign of misinformation for reasons only best known to the legislators, for instance, the allegations that KNSL has no capacity to run the Second Container Terminal are strange and vague among other things.
It’s worrying that the MPs and a section of local trade unionists are taking advantage of the public ignorance to make privatization sound as if it’s a very new thing yet those in the know will tell you that privatization of certain functions of the port remains a common thing. A re-look at some history would suffice.
TYPES OF CARGO
There are typically two types of cargo handling and terminal operating firms. The more common structure for terminal operating firms is a company that owns and maintains all superstructures at the terminal (for example, paving, offices, sheds, warehouses, and equipment).
As a service facility, the Port of Mombasa has been privately operated since its creation 123 years ago and up-to-date some port facilities remain operated by private companies.
Before Kenya Ports Authority (KPA) came into being in 1978, the then East African Railways and Harbors Administration owned the port.
During the said period all stevedoring services at the East African Sea ports of Mombasa, Tanga, Dar es Salaam and Mtwara was being handled by five different organizations, four of them privately owned.
Stevedoring services were solely provided by the Landing and Shipping Company of East Africa Limited commonly abbreviated to LASCO in which 70.6 per cent of the shares were held by the East African Railways and Harbors (EAR&H) administration and the reminder by three of the private stevedoring companies.
These three private stevedoring companies were the African Wharfage Company Limited (AWCL), East African Lighterage Company (EALC) owned by T.B Davis Limited of Durban, Republic of South Africa, the Tanganyika Boating Company Limited owned by Holland-Africa Shipping Company and the Associated African Docks Enterprises limited.
In 1963 all these private stevedoring companies were amalgamated with LASCO taking over the capital and services of the four private firms.
And eventually East African Cargo Handling Services (EACHS) was formed with sole responsibility for all cargo handling and stevedoring services in all aspects with a majority shareholding by East African Railways and Harbors.
The EACHS headquarters was in Mombasa with branches in Tanga, Dar es Salaam and Mtwara.
The AWCL held contracts for the British India Steamship Navigation Company, the Union Castle Mail Steamship Company Limited and the French and Italian Shipping Lines as well as some coaling ships at the Mbaraki Wharf while the EALC worked the ships of the Clan and Ellerman Lines, the Harrison Combine and the Japanese and German Lines.
In the early 1970s, the East Africa Cargo Handling Limited was renamed Kenya Cargo Handling Services before the merger with Kenya Ports Authority in 1986.
In 1967 Kenya, Uganda and Tanzania joined forces to set up the East African Community (EAC). They also created a new authority, the East African Harbors Corporation, to run the principal ports of Dar es Salaam, Mombasa, Mtwara and the oil port of Tanga.
During the said period (1967) the East African National Shipping Line (EANSL) was established in Dar es Salaam bringing together four states of Zambia, Uganda, Kenya and Tanzania.
The EANSL owned a total of six foreign ocean-going merchant ships manned by East African Seafarers. The vessels were Harambee, Jongoo, Mulungushi, Ujamaa, Uganda and Jitegemee.
The vessels were managed and operated by the Mombasa based Southern Line Shipping Company. However, East African National Shipping Line collapsed during the breakup of the East Africa Community.
Rewind back in history. Mombasa port was created in 1896 with the building of a jetty at Kilindini on the west side of the island which was used mainly for transferring goods between seagoing vessels and the Kenya-Uganda railway line.
Later, three more jetties were built to handle rail borne goods and other import and export traffic.
In 1907 the first of two lighterage wharves was built on the south side of Ras Kilindini with four lighter handling points.
Development of the modern Port of Mombasa began in earnest in 1926 with the completion of two deepwater berths supported by transit sheds at Kilindini Harbor.
Three more berths, also supported by sheds, were completed in 1931 and the Shimanzi Oil Terminal entered service in the same year.
Two more berths were built in 1944 to cope with a sudden increase in shipping and traffic as a result of Britain’s wartime naval requirements in the Indian Ocean.
Berth No 6 was omitted due to unfavorable foundation conditions while a second lighterage wharf was built in 1954 with eight head jetties. Two deep water berths – also on the island – were added in 1955 and 1958.
As the level of cargo and ship traffic continued to rise, the port was obliged to expand to the mainland at Kipevu where berths Nos 11 and 12 were completed in 1961.
The Kipevu Oil Terminal was built in 1963 to serve the East Africa Oil Refinery and two more berths were completed in 1967.
With the coming of the container age, two deep water berths entered service in 1975 which had been designed for subsequent conversion into container handling berths.
The same year marked the beginning of the container trade in Mombasa, with 1,385 TEU handled in 1975.
As container traffic continued to grow, berths Nos 16 and 17 were converted into container handling berths and a third berth, purposely designed for container handling, was added in 1980.
The rapid increase in container traffic through Mombasa prompted the port authority to extend the container handling operation upcountry and in the years that followed it set up two inland container depots at Embakasi in Nairobi (which opened in 1984) and at Kisumu on Lake Victoria.(1994).
Therefore here is the truth: firstly, 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 KNSL shareholding structure is as follows.
KPA (53 per cent), UNIMAR (7 per cent), DEG (7 per cent) and MSC through its 100 per cent owned subsidiary 33 per cent. KNSL is a State Corporation and it will remain so.
Secondly, there is no privatization 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.
Thirdly, 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 ownership shares.
Fourthly, in a lease arrangement, the principal can terminate the lease any time, if any terms and conditions have been violated. Where is the fear coming from?
Fifthly, this is not about the Port but it’s 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, and it will have access to about 550 ports in the World.
MSC will assist in training world class seafarers for the Global market and KNSL will guarantee 2,000 seafarers per year for the next five years.
Kenyans will access about 52,000 seafarer jobs from MSC alone with salaries ranging from about $800 (Sh80,000) to $1200 (Sh120,000).
For MPs to make outrageous claims just to earn acres of media coverage is an insult to the intelligence of their constituents.
It would be wiser if they were offering feasible alternatives other than trying to pour cold water on a noble project.