Kenya to lease key ports to private firms

Kenya has revived the process of leasing its key ports to bolster competitiveness of its maritime sector in order to generate at least $10 billion annually by 2030.

Kenya has placed bids to lease sections of Mombasa and Lamu ports to private operators, with landlord-type port management system expected to take place in what is aimed at making the Northern Corridor competitive.

President William Ruto’s administration is seeking private investors to take over the operations and management of five critical ports facilities – Mombasa and Lamu ports, Dongo Kundu Special Economic Zones, Kisumu port, and Shimoni fisheries port through a public-private partnership.

President Ruto said the move will turn the port facilities, which have been confronted with the challenge of congestion and higher dwell times for cargo, into world class ports.

This week, the Kenya Ports Authority (KPA) begun the leasing process of nine assets, with interested applicants given until October 12 to submit applications. These include the Lamu Container Terminal berth 1-3, Lamu Special Economic Zone, Mombasa Port’s berth 11-14 and Mombasa port container Terminal 1.

KPA officials explain that the projects are being implemented under the authority’s 25-year port master plan.

In the past, there have been concerns about private-owned firms operating KPA facilities, with players citing the fact that it may dent KPA’s revenues due to secrecy in the lease agreement.

But the announcement has brought mixed feelings among port stakeholders, with some questioning the process considering the parastatal is the only government institution raking profits. KPA recorded more than $15 million in profits last financial year.

“We are waiting to see the miracle behind it considering previous government institutions which were privatised have never recovered. But if well managed, it will bring in efficiency,” said Shippers Council of Eastern Africa CEO Gilbert Langat.

Kenya International and Warehousing Association chairman Roy Mwanthi on his part said privatising Lamu port was a good idea as the facility has been idle.

“The move is one way to make the project not turn to be a white elephant,” said Mwanthi.

Already, Kenya has been courting Dubai and Saudi Arabia multinational logistic companies for a possible investment in the Lamu Port, but remained doubtful over what private company will do to make Mombasa port more vibrant.

The concessions once signed, could give DP Worldoperating concessions at Kenya’s major ports, including Mombasa, Lamu and Kisumu.

Kenya’s trade route has recently come under intense competition with the landlocked countries of Uganda, Burundi and Rwanda preferring to use the Tanzanian route which has seen total cargo passing through Mombasa, drop to 33.74 million metric tonnes in 2022 from 34.76 million tonnes in 2021.