The High Court on Tuesday quashed a decision by Cabinet Secretary National Treasury allowing Kenya Ports Authority to award Portside Freight Terminals Ltd, a contract and licence for the development of a second grain bulk handling facility at the port of Mombasa.
The firm is linked with former Mombasa Governor Hassan Joho’s family.
Justice John Onyiego further directed KPA and the CS to ensure that the procurement for the development of the second bulk grain handling facility at the port of Mombasa must be undertaken in accordance with the law including through competitive bidding.
Justice Onyiego also issued a declaration that that KPA’s board of directors acted beyond its legal powers (ultra vires) and without authority in purporting to undertake the procurement process which is the mandate of the managing director.
The decision followed a petition by Busia Senator Okiya Omtatah who challenged the award of contract and license to Portside Freight Terminal Ltd for development of the second grain bulk handling facility at the port of Mombasa.
The judge noted that the whole process in seeking to award Portside Freight Terminal the tender was done in an ‘electric speed’ (four days) and that KPA board had no mandate to oversee the procurement.
“By virtue of the board approving the contract, it created a monopoly. It acted beyond its legal powers in discriminating other players and Kenyans in the second grain bulk handling facility,” said Justice Onyiego.
“The board had no intention of opening the door to other stakeholders, am convinced that KPA acted beyond its powers,” said Justice Onyiego.
He said the CS National Treasury acted irregularly and that the licence issued to Portside Freight Terminal was null and void while noting that the board approved the award of licence before amending KPA’s masterplan.
The judge noted that the general power to oversee the amendment of KPA masterplan to serve its users lay with the board but changes ought not to be done in boardrooms but through engagement with stakeholders.
Justice Onyiego also issued a declaration that that KPA’s intended award of contract and licence to Portside Freight Terminal Ltd for the development of the second grain bulk handling facility at the port of Mombasa violates the constitution.
In his petition, Mr Omtatah had argued that the board took into account irrelevant considerations in relation to Portside Freight Terminals Ltd’s proposal for the development of the grain handling facility.
Mr Omtatah argued that the respondents’ decision violated legitimate expectations of six companies which expected that their proposals would be considered in view of the new adopted Specially Permitted Procurement Procedure in the tendering process.
The six companies which were named as interested parties, apart from Portside Freight Terminals Ltd, were Kilindini Terminals Ltd, Mombasa Grain Terminal Ltd, Kapa Oil Refinery, Africa Ports and Terminals, Multiship International, Kipevu Inland Container EPZ Ltd and Dock Workers Union.
“KPA’s Board of Director’s decision purporting to approve a proposal that sought to construct a facility outside the approved location under the KPA Master Plan is excessive, abuse of power and irrational,” argued Mr Omtatah in his petition.
Mr Omtatah said that KPA masterplan identified and projected that the second grain bulk handling facility was to be located at either Dongo Kundu or Lamu Port.
According to the activist, Portside Freight Terminal Ltd submitted its application through a letter which was received by KPA MD and a General Manager proposing the construction of a new berth which fell outside Dongo Kundu and Lamu Port.
KPA defended the award of contract and license to Portside Freight Terminals Ltd arguing that it (company) made proposals that it was to use its own land and money to develop the second bulk grain handling facility unlike other companies.
The court heard that though KPA masterplan provided that the second grain handling facility to be at Dongo Kundu circumstances under which the license was issued changed as it had envisaged the use of its own resources to finance the development of the facility.
Portside Freight Terminals Ltd told the court that the petition had been filed for collateral purposes to entrench existing monopoly which is not in public interest.
It argued that the case had been brought as a smokescreen to delay the project to the benefit of existing operators.
Portside Freight Terminal Ltd argued that when investing its funds for the facility it was to be used by everyone as it was a condition given.
Dock Workers Union and Katiba Institute, who are also interested parties in the suit, supported the petition by Mr Omtatah arguing that against technical advice, KPA Board of Directors awarded the license to Portside Freight Terminal Ltd while rejecting other applicants.
