A private company linked to the family of Mombasa Governor Ali Hassan Joho is finally set to resume operations of a taxpayer-funded domestic freight terminal in Nairobi, in a controversial deal that has sparked corporate protests competing logistics.
Mombasa-based Autoports Freight Terminals Ltd has been granted the exclusive right from Kenya Railways Corporation (KRC) to use the Nairobi Freight Terminals (NFT), strategically located near the Standard Gauge Railway (SGR) terminal at Syokimau, excluding other players who use the new rail freight services from the station.
A notice from the Kenya Ports Authority (KPA) dated August 17, 2021 says the company will start processing all containerized and conventional cargo from the terminal from October of this year.
Kenya Ports Authority has received a request from KRC to issue you an official communication to allow consignees / importers of both container and conventional freight to name their shipments from the port of loading to the KR Nairobi freight terminal. (NFT). warehouse and will be operated by M / S Autoports Freight Terminal (AFT) and is connected to the SGR line. This allows more importers to use SGR, âreads the opinion from KPA Acting Managing Director John Mwangemi to Kenya Shipping Agent Association CEO Juma Tellah.
Importers must write in the bill of lading âCargo in transit to NFT c / o. Autoports Freight Terminal-Nairobi will have its cargo transported to Nairobi by the company related to the Joho family, in accordance with the notice.
Mr. Mwangemi, in his memo, indicates that NFT has the capacity to handle containerized and conventional cargo, has a warehouse and a modern container handling yard. The facility will accommodate government agencies involved in the freight response, namely Kenya Revenue and Kenya Bureau of Standards.
He said NFT is expected to be operational in October 2021, giving family business Joho a virtual monopoly over rivals.
âDue to the above, the Authority has no objection to KR’s request that importers make a direct appointment as well as the change of delivery point to NFT c / o. Autoports Freight Terminal-Nairobi for freight currently not designated by importers, âMwangemi said.
Even before the directive came into effect, rival logistics companies protested the allocation, saying the government would lose revenue and also cause losses to traders, some of whom have long-term transport contracts with companies. other logistics companies.
Kenya’s Association of Container Freight Stations (CFS), Daniel Nzeki, said members “will push for equality” in the sector.
“We have always advocated for equality in trade facilitation among all of our members. We look forward to seeing KPA extend the same treatment to others,” Nzeki said.
Kenya International Freight and Warehousing Association (Kifwa) chairman Roy Mwanthi called the move unfair, arguing that other container freight stations (CFS) will suffer losses and may even force some to close.
âThis move will eat away at ICD’s freight share, which will affect not only private companies in the sector, but government revenues as well. We ask KPA to open the same window to all CFS as it is is an unfair and unbalanced trade deal, “he added. Mr. Mwanthi said.
KRC approved AFT’s request to lease part of the land from KRC at the Nairobi Freight Terminal (NFT) in Nairobi South at its 410th Special Board Meeting held on September 26, 2018.
The board of directors also agreed to lease 26 acres of the total 36 acres to NFT from Autoports for a 45-year period from December 1, 2018, subject to the logistics company paying a stand premium of 78 million. of shillings, exclusive annual rent of 19 shillings. 0.5 million, administration fee of 5,000 shillings, attachment fee of 50,000 shillings, three-month security deposit of 4.88 million shillings and administration fee of 100,000 shillings; all totaling Sh103 million.
The exclusive deal raised eyebrows, attracting the attention of investigative agencies given the strategic location of the public facility.
Autoports also obtained a preferential agreement to transport goods from Mombasa to Nairobi over a period of 10 years with a discount of up to 80%. This goes against the maximum 10 percent volume discount allowed in the company’s price list.
The company negotiated with KRC a special tariff of around 45,000 shillings to transport a wagon of bulk goods from Mombasa to Nairobi, compared to 214,700 shillings according to the KRC tariff published in December 2017, which came into effect in January 2019. .
To benefit from the special tariff, Autoports convinced KRC’s board of directors of guaranteed business volumes promising to move 1.6 million tonnes (or 24,615 railcars) per year.
The autoports would ideally pay 5.28 billion KRC shillings to transport the 24,615 cars they have promised to move at the preferential rate of 45,000 shillings, but will now pay around 1.1 billion shillings, which translates into a difference. of around 4.17 billion shillings per year in a 10-year deal.