The completion of the first phase of the second container terminal in Mombasa, a new deep-water facility, is imminent. At the beginning of 2015 there were a lot of statements to the effect that the terminal would be open early for business – some suggested March 2015.
Nothing, however, could be further from the truth with the main obstacle nothing to do with construction or equipment, but the appointment of a terminal operator.
The process of appointing an operator started early enough with the original plan foreseeing bid submission on June 26, 2015, review of the technical element of the bids and then opening of the financial component around three weeks later.
Following the review of the technical offers, however, a number of parties were advised they had not technically qualified – APM Terminals, Bollore and ICTSI – and would not go through to the next round. All three of these companies, however, took issue with such a judgement and went to the Petition Tribunal to formally challenge it.
Since then, there has been, and continues to be, a considerable amount of legal to-ing and fro-ing, not least due to certain companies initially being reinstated by the Tribunal and then disqualified again on what appear to be fairly spurious grounds. So, step-by-step, the process of appointing an operator has been halted while legal machinations play out.
Behind this visible chain of events, however, there are suggestions from informed parties that the current conundrum is also due to vested interests at work – parties wishing to steer the process in a specific direction. The disqualification of bidders on quite spurious technical grounds or due to minor deviations of agreed procedure is seen to be symptomatic of this.
The spectre of vested interest also came up in the second half of last year when the National Treasury made last minute changes to the tender documents that had already been issued to bidders.
At the time, bidders cited seven addendums that critically changed the contents of the initial tender documents. They questioned why the new rules came along after the contracting agency, Kenya Ports Authority (KPA), had already conducted the technical evaluation stage of the tender and pre-qualified participants. They also specifically expressed concern that ‘power peddlers’ interested in the process are responsible for influencing the addendums to suit particular bidders. Formal complaints were lodged by bidders with the Public Private Partnership Review Board in conjunction with what they described as “unfair changes”.
Get on with it
Just as doubts are increasingly surfacing about the integrity of the Second Mombasa Container Terminal privatisation process, so frustration is building among the bidders, agencies - such as JICA, who financed the container terminal development - and sponsors to the port such as Trademark and the World Bank.
The port of Mombasa and the country as a whole will clearly benefit hugely from an efficiently run new container terminal. But already at this stage, assuming the current tender is not cancelled, the prospect of a four to six month delay in appointing an operator is in sight.
This does not present an attractive picture of Kenya to the worldwide investment community. There are strong question marks over the second container terminal bid process offering a level playing field in competitive terms. Equally, government has not distinguished itself by making last minute changes to the tender process which may work to the benefit of some parties and not others.
But perhaps most damming of all the whole process has been lost momentum. There were many positive features of the bid process, namely a number of the world’s foremost container terminal operators’ submitted bids; many of the international companies have partnered with strong local companies; JICA, the World Bank, Trademark and other agencies are wholly behind getting on with opening the new facility; and the completion of the bid process will meet a genuine need and not least serve to alleviate persistent congestion in the container sector in the port of Mombasa.
In, reality, however, these positives have not been capitalised on. Surely, for example, world recognised terminal operating companies will be technically qualified to operate the new Mombasa terminal? Instead, the process stalled as various bidders turned to the courts to try to protect themselves from technical disqualification. It is a shameful situation but even more shameful perhaps are the reasons behind it.
