Recently, the Kenyan government expressed its hope to attract international companies to take over the management and operation of its two major seaports and an important logistics special economic zone to improve the efficiency and competitiveness of the facilities.
The Kenya Ports Authority (KPA) said it wants to seek multinational companies to cooperate with Kenyan companies and take over the operations of parts of Lamu Port and Mombasa Port and the Lamu Special Economic Zone (SEZ). It has issued a tender.
The tender is the clearest indication of President William Ruto and the current government’s determination to privatize port operations. But the move has been divisive and often controversial, with similar attempts in the past shelved amid opposition from politicians and dockworkers and accusations of corruption and irregularities.
Just last year, global ports operator DP World was embroiled in a port privatization controversy, with politicians saying the company had secretly signed a deal with the previous government to take over the operation, development, redevelopment and management of all the country's key strategic ports .
KPA hopes the port privatization process will support $10 billion in economic activity.
Acknowledging that Lamu Port, which has not yet been optimally utilized, has lagged behind since its commissioning in May 2021, the KPA envisaged an owner-concession model in which private investors would be solely responsible for handling the terminal for 25 years. The operator will pay the fixed and variable fees agreed by the KPA.
The same model is adopted at Mombasa Port Container Terminal 1, which currently has berths 16, 17, 18 and 19 and is a terminal dedicated to handling containers. The private investor will have full control of the facility during the 25-year concession period but will be required to pay a fixed and valuable fee to the KPA.
For berths 11-14 of the Port of Mombasa, the authority chose to design, build, finance, operate and maintain (DBFOM) structures to upgrade the terminal to international standards. The facility was developed in 1967 to operate as a multi-purpose berth and required strengthening, straightening and deepening.
In the case of Lamu Port, the KPA wants private investors to take over the development of the special economic zone located to the west of the port, which is known as an ideal location for warehousing and light industrial activities.