Ksh1.4 trillion ports lease plan,as Ruto make U-turn

In what appears to be a U-turn on the previous administration’s proposal to hand over ports to private investors, the Kenya Development Corporation, has revealed that the Kenya Kwanza administration is looking for private players.
KDC is now seeking to have private entities run sections of Kilindini Harbour, Dongo Kundu Port, Lamu Port, Kisumu Port, and Shimoni Fisheries Port in order to make the northern corridor more competitive.
“The ports face the challenge of congestion and, as a result, longer cargo dwell times. The ports will be leased/contracted to private operators with a landlord-type port management system,” the KDC says in its pitch to possible investors.
Kenya’s commercial route has recently faced stiff competition, with landlocked Uganda, Burundi, and Rwanda choosing to use the Tanzanian route.
Both countries have attempted to modernize their ports or create new ones (Lamu Port in Kenya and Bagamoyo in Tanzania) in order to entice landlocked countries by offering speedier cargo evacuation.
The northern corridor, a multimodal trade route connecting landlocked countries in the Great Lakes Region to the Kenyan coastal sea port of Mombasa, has competed for cargo with Tanzania’s central corridor.
The Central Corridor is a transit and trade route that connects Burundi, Uganda, Rwanda, and the Democratic Republic of the Congo to Tanzania’s coastline.
According to official figures, the volume of cargo handled by Mombasa port fell for the first time in five years, with participants blaming increased rivalry from Dar es Salaam.
According to figures compiled by the national statistician, total cargo transiting through the port declined to 33.74 million metric tonnes last year from 34.76 million tonnes the previous year.
The construction of Standard Gauge Railway (SGR), a new railway that is faster and can carry more products, is part of the two countries’ aim to strengthen their respective trade routes.
During the election campaigns last year, the Ruto-led Kenya Kwanza Alliance opposed a similar proposal proposed by Uhuru Kenyatta’s previous administration, claiming that the selected infrastructure assets had been surreptitiously sold to Dubai Port World FZE.
The coalition claimed that Mr Kenyatta illegally sold the ports of Mombasa, Lamu, and Kisumu, while the previous government stated that no deal for leasing the assets had been signed.
However, with the port of Mombasa facing strong competition due to its limited capacity, the Ruto government is turning to private investors for a makeover.
The Kenya Ports Authority (KPA) and the Lapsset Corridor Development Authority have been selected as the leasing’s implementing agency.
The PPP exercise is expected to raise Ksh1.4 trillion ($10 billion) for the government.
Furthermore, the government is seeking up to Ksh42.1 billion ($304 million) in private investment in the Port of Lamu, with a significant portion of the funds going toward developing the port’s agribulk and liquibulk terminals.
Almost three-quarters will be deployed upfront, with the government’s selling pitch to investors being expected robust growth in both imports and exports.
The Agribulk Terminal will receive the lion’s share of the anticipated capital investment of Ksh29.1 billion ($210 million), with 78.0% of this amount likely to be paid immediately.
“Agribulk import demand at Lamu’s port is expected to grow from 547,000 tonnes in 2023 to 3.3 million tonnes in 2045. The investment will allow for the facilitation of import and export to meet the demand for grain requirements, as well as the creation of job opportunities.”
The Liquidbulk Terminal is anticipated to cost Ksh13 billion ($94.0 million), with 65% of the total investment coming from the government.
Storage tanks at the Lamu port are estimated to be the most expensive component, costing Ksh4.2 billion ($30.0 million).
“In Kenya, demand for refined oil product imports and crude oil exports is expected to rise from 6.8 million tonnes in 2020 to 19.3 million tonnes in 2045.”
Lamu port’s refined oil imports are predicted to increase from 395,000 tonnes in 2023 to 2.6 million tonnes in 2045. Crude oil shipments through the Lamu port are likely to climb to three million tonnes, according to KDC.
As part of a multiagency team’s procedures in April, all agencies handling cargo at Mombasa’s port were required to clear it within 24 hours.