Kenya Ports Authority under scrutiny over alleged monopoly in grain handling

KENYA – The Committee on Implementation in the National Assembly has raised concerns over the alleged monopoly held by the Kenya Ports Authority (KPA) in grain handling, with revelations that the authority still relies on a single grain bulk handler, Grain Bulk Handlers Ltd (GBHL).

The GBHL has been the sole grain bulk handle at the port since 1992 when it was granted a wayleave to establish a conveyor belt system for handling and storage of bulk grain at the port quay.

As per the lease, KPA was not to allow or permit or license any other person to develop or operate a similar facility for 8 years, to create room for GHBL to recoup its investment.

However, Chairing the committee, Budalang’i legislator Raphael Wanjala, raised concerns that despite GBHL’s lease running for 33 years, from 2000 when the lease could end, the KPA purportedly failed to introduce competition in grain handling, as agreed upon in the initial terms.

The committee questioned the compliance of KPA with regulations concerning fair business practices and monopolies.

Kajiado Central Legislator, Memusi Kanchory, raised concerns over the lack of intervention from the Attorney General’s office regarding the alleged monopoly.

According to the joint response by Mohamed Daghar, Principal Secretary, State Department for Transport, Ministry of Roads and Transport and KPA Managing Director, Capt. William Ruto, the KPA board had resolved on 30th April 2008 to “liberalize handling of grain at the Port to eliminate monopoly and promote healthy competition”.

However, the process of tendering a second grain handler was halted to allow for further stakeholder consultation, a decision that has drawn criticism from legislators.

Despite promises to license a second grain handler by 2022, the KPA has yet to implement this decision.

This comes after, in Feb 2024, the Court of Appeal allowed a second firm, Portside Freight Terminals to establish a competitive facility at the port.

Court of Appeal judges Pauline Nyamweya, Imaana Laibuta and George Odunga found that the High Court erred in stopping Kenya Ports Authority (KPA) from awarding Portside Freight Terminals the deal for building a second facility at the port.

The three judges said awarding the contract to Portside was not discriminatory and that the KPA and the Treasury did not breach the Constitution in tapping the firm.

This decision could put to an end the monopoly of handling grains at the Mombasa port in the hands of tycoon Mohamed Jaffer’s Grain Bulk Handlers Ltd (GBHL). 

The Committee on Implementation conducted a site visit to the Kenya Ports Authority in Mombasa as part of its efforts to follow up on the Departmental Committee’s report on revenue optimisation in grain handling services at the Port of Mombasa.

The issue of monopoly in grain handling at the port remains a contentious subject, with stakeholders calling for urgent measures to promote fair competition and transparency in the sector.

For all the latest grains industry news from Africa, the Middle East, and the World, subscribe to our weekly NEWSLETTERS, follow us on LinkedIn, and subscribe to our YouTube channel.