Govt to work with private sector at port

February 28, 2011
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, MOMBASA, Kenya, Feb 28 – The government is exploring a public-private partnership arrangement to improve efficiency at the port of Mombasa after its intention to privatise it was heavily opposed by various stakeholders.

While ruling out the concession of the port to private sector players, Transport Minister Amos Kimunya on Monday said that a public-private partnership was one of the options that would be considered in improving port capacity and operations under the privatisation programme.

"The port operations are excessively overstretched; but stakeholders should take comfort in the fact that public ports are generally never sold. There are other public-private participation models that can be employed to improve port efficiency," Mr Kimunya said.

The Minister disclosed that the government\’s preferred model was that of a landlord port which allows for the participation of both public and private sectors in the development and provision of port facilities and services.

The use of various public-private partnership models such as build and transfer to attract private sector capital is one of the common approaches that have been employed by most of the efficient ports in the world.

The Cabinet approved the privatisation of stevedoring services and the development of additional berths in December 2008 but the plan has been fought mainly by coastal legislators, residents and dock workers who argue that such a move would render many people in the region jobless.

The dock workers have in the last few weeks been engaged in demonstrations forcing the government to step in to quell the tension and reassure the residents.

At a Kenya Ports Authority (KPA) stakeholders\’ workshop in Mombasa which was also attended by Finance Minister Uhuru Kenyatta, Mr Kimunya underscored the need to upgrade the port\’s infrastructure and other facilities which would in turn enable the country to remain a key player in facilitating seaborne trade economies within the Eastern Africa region.

He warned that the Kenya risked losing out on the development of transhipment business which has the potential to easily double job opportunities at the port.

"We are not operating in a vacuum; there are ports in Durban, Mozambique and Kisimayu among others,\’\’ he cautioned.

Although the port of Mombasa has continued to introduce more modern equipment through the modernisation project, the productivity of the container terminal at an average of 15 to 17 moves per hour remains very low compared to other ports with similar equipment.

For instance the Port of Dakar current productivity is an average of 45 moves per hour.

Mr Kimunya revealed that the Government has also secured a guaranteed long-term loan amounting Japanese Yen 26.5 billion (Sh26.7billion) to finance the first phase of the second terminal. This is additional to Sh8.4 billion that has been provided jointly the Government and KPA.

He said the government\’s plan to deepen and widen berths and the ship turning basin to accommodate larger post-panama vessels would cost the tax payer Sh5.2 billion.

Available preliminary estimates indicate that Kenya will need Sh163 billion to finance the required additional port capacity in the next 10 years.

Presently, port throughput is estimated to be in the region 19 million tonnes. This expected to grow at the rate of 10 percent every year, necessitating the doubling of available port capacity in the next five years.

With an annual capacity of 250,000 Twenty Tonne Equivalent Units (TEUs), the existing container terminal for instance handles 700,000 TEUs, almost three times its capacity. 

During the workshop, a section of the stakeholders raised concerns over the Terms of Reference (TORs) for the consultancy work being carried out by CPCS Transcom of Canada which were later clarified by the consultants.

The government through the Privatisation Commission and the consultants are scheduled to have further consultative meetings with local MPs and the departmental committees on finance planning and trade, public works and housing and transport to try and reach a common ground.

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