Dubai investor in talks with Kenya to develop and run port services
Cargo ship ‘MV Seago Peraus’ docks at Lamu Port with 100 units destined for Zanzibar on in August last year. Kenya will allow DP World to develop a special economic zone on 500 acres.
Dubai Port World (DP World) is considering signing a concession agreement with Kenya to undertake the development, operation, management and expansion of transport logistics services in Kenya on various components.
Concession licences grant private parties the right to run and operate port terminals and infrastructure such as container freight, dry ports and storage facilities.
The company enjoys a cordial relationship with governments around the world by investing in infrastructure.
The agreement, if implemented, will see the leading provider of integrated logistics solutions take up concession deals that will give it the power to run at least four berths at the port of Mombasa, the three Lamu Port completed berths and three special economic zones.
Supreme commander
The revelation comes barely three months after President Uhuru Kenyatta met with a United Arab Emirates (UAE) delegation led by Sheikh Mohamed Bin Zayed Al Nahyan, the crown prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces.
On February 15, President Kenyatta met the UAE team in Abu Dhabi where they discussed different ways to rejuvenate their bilateral cooperation for the mutual benefit of the people of the two countries.
On March 1, Kenya entered into a concession with DP World before the UAE delegation flew to Kenya on May 10 to review the status of the implementation of the economic and technical cooperation between the two countries.
A document dated March 30 addressed to DP World Chairman Sultan Ahmed Bin Sulayem and signed by National Treasury Cabinet Secretary Ukur Yatani, who attended the talks in Nairobi and Abu Dhabi, confirms Kenya nominated DP World to develop and operate various port components in Mombasa, Lamu and Kisumu. In the document, Kenya nominated and appointed the logistics hub or any of its subsidiaries to act on behalf of the government of UAE as its agent who shall obtain the right to undertake the development, operation, management and expansion of transport logistics services in Kenya on various components.
Mr Yatani on Wednesday told The Standard that the government’s move is aimed at enhancing economic operations of the Lamu Port South Sudan Ethiopia Transport (Lapsset) Corridor as well as converting the ports into a hub around the region, brushing off complaints by the Kenya Kwanza Alliance that the government was “auctioning”strategic national assets.
He said the successful completion of the agreement would depend on the willingness of the government that will be in office after August 9.
“There is little we can do between now and the next one month. We have only identified a framework of cooperation. This is a statement of intent and we are looking forward to having a relationship on this development. We want to create this (Lamu Port) as a nucleus of logistic development along our corridor and beyond,” he said.
While stating that Kenya would ensure that DP World does not unfairly benefit from the deal, Mr Yatani said the partnership was the government’s option to encourage economic activities along the Lapsset corridor.
Development plans
“Any government has long-term development plans. We also have long-term plans as far as Lapsset is concerned. Lapsset has been with us for 10 years. It’s the Lapsset dream to reach South Sudan. We have been working on expanding infrastructural projects in Mombasa, Nairobi, Nanyuki and Kisumu. We discovered that, for us to encourage economic activities along the corridor, we need to partner with renowned port developing companies – there are many in China, Singapore,” Mr Yatani said.
He said the partnership would help the government create an economic zone in Lamu to benefit traders dealing in imports from landlocked countries.
The Standard further reported the CS as indicating that Kenya’s existing bilateral deals with UAE touch on areas such as port management.
“In this case, we have a standing bilateral and economic cooperation with the government of UAE and have narrowed down to a number of sectors where UAE has an advantage such as logistics, port management and several other areas,” he said. If the concession agreement is implemented, DP World will redevelop berths 11 to 14 at the port of Mombasa, converting the four berths which are currently unable to handle container operations into a modern multi-purpose terminal capable of handling 1 million twenty-foot equivalent units (TEUS).
The Dubai operator will also be given consent to operate, develop and manage the container terminal at Lamu Port by equipping, operating and managing berths one to three of the container terminal and any other subsequent expansion.
Value addition
Kenya will also allow DP World to develop a special economic zone on 500 hectares, next to the Lamu Port, focused on agricultural value addition and servicing the Lamu corridor into Ethiopia and South Sudan.
The operator will also develop a cold chain and logistics park, transforming the port into a logistics hub for Western Kenya, Uganda and the Democratic Republic of Congo. Additionally, it will provide the cold chain required to ensure that agricultural products and fish farmed in the region can be exported.
In the letter, DP World is also expected to develop Naivasha’s cold chain logistics park and link the cold chain and inland container depot to serve Central region and to enable the transfer of cargo en route from Mombasa to Kisumu via train on the standard gauge railway (SGR) to the metre gauge track .
Yesterday, port officials declined to comment on the matter, only referring queries to Mr Yatani, who was unavailable on his mobile phone.
Some of the projects to be undertaken by the Dubai operator include linking berths 11 to 14 at the port of Mombasa with the special economic zone that is about to be developed.
Implementation plan
The operator is expected to include an implementation plan for each project and is expected to sign a non-disclosure agreement with the Kenyan government to enable access to information and documents to facilitate preparation of the detailed commercial proposal.
In the letter, Mr Yatani said the Attorney-General had cleared the concession agreement and was waiting for the DP World team to visit Kenya to independently undertake due diligence of all the components to enable preparation of a well-informed proposal.
The agreement comes at a time when Kenya is yet to disclose details of agreement for the construction of Sh382 billion SGR with the Chinese Exim Bank.
A section of Mombasa leaders, including Nyali MP Mohamed Ali, said licences for port terminals must be granted transparently.
