Supreme Court blocks Joho family's Sh5.9bn Mombasa port deal
Former Mombasa Governor Hassan Joho.
What you need to know:
- This comes after an appeal filed by the Dock Workers Union and Busia senator Okiya Omtatah.
- Mr Omtatah and the union have questioned the process used in awarding the tender to Portside Freight Terminals Ltd.
The Supreme Court has temporarily stopped the construction of a Sh5.9 billion second grain bulk handling facility at the port of Mombasa, which had been granted to firms linked to Cabinet Secretary nominee and former Mombasa governor Hassan Joho.
The apex court presided by Deputy Chief Justice Philomena Mwilu ruled that public interest lies in stopping the construction, pending the determination of an appeal filed by the Dock Workers Union and Busia senator Okiya Omtatah.
Mr Omtatah and the union have questioned the process used in awarding the tender to Portside Freight Terminals Ltd, Portside CFS ltd and Heartland terminals Ltd.
Mr Yusuf Abubakar, the director of Heartland Terminals Ltd, stated that the project would cost approximately $45 million (about Sh5.9 billion), in opposing the case.
“Bearing these factors in mind, we are of the view that should Portside Companies proceed to implement the project, the appeal will be rendered nugatory. In any event, at this stage, we are of the view that a conservatory order will not only preserve the status quo but also save Portside Companies themselves from nugatory expenditure should the appeal succeed,” Justices Mwilu, Mohammed Ibrahim, Smokin Wanjala, Isaac Lenaola and William Ouko said.
The judges said the union and Mr Omtatah had a valid argument as to whether the procurement process undertaken by the Kenya Ports Authority (KPA) met the minimum threshold of a procurement as per the Constitution and various provisions of the Public Procurement and Assets Disposal Act (PPDA).
The High Court had initially declared the procurement process a nullity on grounds that the process amounted to single sourcing, but the decision was overturned by the Court of Appeal, thus giving the procurement process a clean bill of health.
The companies were then allowed to develop an overhead conveyor belt of about 450 metres through the G-Section area of the port.
Portside Freight Terminals Limited had proposed the development of a common user Island Berth (at no cost to KPA) by investing $45,000,000, as long as it was granted a wayleave licence for the passage of overhead conveyors to its grain handling terminal on its private land outside the Port precincts through the ‘G’ section area.
Mr Omtatah argued that it was improper to resort to the “Specially Permitted Procurement Procedure” under Section 114A of the PPDA to award the contract to Portside.
He submitted that the process was not fair, equitable, transparent and competitive, as other firms including Kilindini terminals Ltd, Mombasa Grain Terminal Ltd, Kapa Oil Refinery, Africa Ports & Terminals, Multiship International and Kipevu Inland Containers PEZ Limited were interested in the tender.
He added that if not stopped, the firms will proceed to construct and complete the grain bulk handling facility and that since funding is already disbursed and spent, demolishing the facility will not be an option and is irreversible.
Portside Companies opposed the case and indicated the urgency for the commencement of the project and decried the delay caused by the application.
It was revealed that the firms have entered into credit and financing arrangements, in addition to obtaining the relevant statutory approvals and licences, all of which are time bound.
Mr Abubakar said granting of the orders will further result in delaying implementation of the project, thereby strengthening the current monopoly in grain handling sectors.
He said the monopoly will lead to higher food costs, not to mention the effect on national food security, which is the very premise for the granting it permission to construct the facility.
Mr Abubakar said that from the KPA technical report, the Authority stands to earn revenues in excess of Sh1 billion annually. He also argued that in addition to revenue lost over the last couple of years, further delays will cost KPA close to Sh1 billion annually in lost revenue.
