The High Court has temporarily halted the construction of a second bulk grain handling facility at the Port of Mombasa, which was awarded to companies linked to mining cabinet secretary nominee and former Mombasa governor Hassan Joho.
The High Court, headed by Deputy Chief Justice Philomena Mwilu, ruled that the public interest was to halt construction, pending the determination of an appeal filed by the Port Workers Union and Busia Senator Okia Umtata.
Mr Omtata and the unions questioned the process used in awarding the tender to Portside Freight Terminals Limited, Portside CFS Limited and Heartland Terminals Limited.
Opposing the case, Mr Yusuf Abubakar, the managing director of Heartland Terminals Limited, said the project would cost about $45 million (about Sh5.9 billion).
“Taking into account these factors, we are of the view that if the Portside Companies proceed with the project, the appeal will be worthless. In any event, at this stage, we are of the view that the interim order will not only preserve the status quo but will also save the Portside Companies themselves from unnecessary expenditure if the appeal is successful,” according to Justices Mwilu, Mohammed Ibrahim, Smokin Wanjala, Isaac Linawula and William Oko.
The judges said the union and Mr Omtata had a valid argument on whether the procurement exercise by the Kenya Ports Authority (KPA) met the minimum procurement requirements stipulated in the Constitution and various provisions of the Public Procurement and Asset Disposal Act (PPDA).
The Supreme Court declared the purchase invalid because it was a sole source transaction, but the Court of Appeal overturned that decision, giving the purchase a clean bill of health.
The companies were allowed to develop an overhead conveyor belt across the section G area of the port for a length of approximately 450 metres to the port facility.
Portside Freight Terminals Co., Ltd. had proposed to develop a shared-user island berth (at no cost to the Korea Port Authority) by investing $45 million as long as it was granted a transit permit for overhead tankers to pass through its grain handling terminal on its own land outside the port premises (but close to it) through the underutilized “G” section of the port.
Mr Omtata alleged that it was improper to resort to “specially permitted procurement procedures” under section 114A of the Crude Oil Procurement and Export Development Act to award the contract to Portside.
He added that the process was not fair, equitable, transparent or competitive as other companies 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 the companies are not stopped, they will continue to build and complete the bulk grain handling facility, and since the funding has already been disbursed and spent, demolishing the facility will not be an option and is irreversible.
Port companies opposed the case, citing the urgent need to start the project and denouncing the delay caused by demand.
The companies were found to have entered into credit and financing arrangements and obtained relevant legal approvals and licenses, all of which were time-bound.
Mr. Abu Bakr said that granting the orders would delay the implementation of the project and thus reinforce the current monopoly in the grain handling sectors.
He said the monopoly would lead to higher food prices, not to mention impact on national food security, which was the basis for allowing him to build the facility.
Abubakar said from the technical report of the Kenya Ports Authority, the authority would generate revenues of over Sh1 billion annually, and in addition to the lost revenues over the past two years, further delays would cost the port close to Sh1 billion annually in lost revenues.