The Supreme Court has quashed a decision that granted a firm linked to Mining Cabinet Secretary Hassan Joho permission to construct a second grain bulk handling facility at Mombasa Port.
A five-judge bench of the apex court, presided over by Deputy Chief Justice Philomena Mwilu, ruled that the Kenya Ports Authority’s (KPA) decision to award the licence to Portside Freight Terminals Limited through the Specially Permitted Procurement Procedure (SPPP) was inconsistent with the Constitution.
However, it emphasised that such projects must be awarded through processes that are fair, equitable, transparent, competitive and cost-effective.
“In other words, the protection of the supremacy of the Constitution is critical and there can be no greater public or national security interest than upholding the Constitution, its values and principles and obeying the law,” DCJ Mwilu and justices Mohamed Ibrahim, Smokin Wanjala, Isaac Lenaola, and William Ouko stated.
Deputy Chief Justice Philomena Mwilu.
Photo credit: File | Nation Media Group
They added that although SPPP is an alternative to open tender, “it must truly be seen, in terms of the Constitution, as a system that is fair, equitable, transparent, competitive and cost-effective, without the other elements of open tender”.
He claimed that other companies were unfairly excluded because their bids were never considered under the adopted SPPP method.
He also raised concerns about the speed of the procurement process suggesting bias in favor of Portside Freight Terminals Ltd.
In its defense, the government said the move aimed to end the monopoly held by Grain Bulk Handlers Limited (GBHL), which had been the sole operator of a bulk grain facility at the port for more than three decades.
KPA argued that diversification was necessary to avoid over-reliance on a single provider which could threaten food security.
According to KPA, the grain handling berths produced a capacity of approximately 2.4 million tonnes annually.
It also claimed that Portside Freight Terminals offered strategic advantages including ownership of adjacent land and a proposal to build a common user island berth at its own cost.
On its part, the firm defended its use of SPPP arguing it was allowed under Section 114A(2) of the Public Procurement and Asset Disposal Act in situations involving public interest or national security.
Mr Yusuf Abubakar, director of Heartland Terminals Ltd, said the project would cost approximately $45 million (about Sh5.8 billion).
However, the court found that KPA failed to meet the minimum constitutional threshold for public procurement.
The judges ruled that KPA had not demonstrated exceptional circumstances that justified bypassing a competitive tendering process.
“KPA failed to demonstrate, in terms of Section 114A of the PPAD Act, that it chose the SPPP over other competitive methods of procurement due to exceptional requirements that would have made it impossible, impracticable or uneconomical to adopt a competitive system as envisaged by the Constitution,” the court said.
The Supreme Court overturned a Court of Appeal ruling that had cleared the way for the project stating the appellate judges erred in reversing the High Court’s decision.
The ruling emphasised that while SPPP is a legal procurement method, it cannot be misused to evade competition.
Any public entity choosing this route must demonstrate the procedure is necessary, in line with legal requirements, and in the public or national interest.
In 2004, KPA developed a master plan in 2004 which was reviewed in 2009 and officially launched in 2019 to run from 2017 to 2047.
The court reiterated that constitutional principles and procurement laws and the SPPP, as an alternative method of procurement must guide all government contracts, regardless of urgency or perceived strategic value.
