Lobby for additional Fertilizer and Grain Handling Facility in Mombasa, Kenya

Bulk grain chronology of events:

1) In year 2000 KPA grants a 33 year bulk grain and fertilizer license to Grain bulk handlers ltd.The license restricts other handlers from handling bulk grain at the port until 15th February,2008, i.e effectively a monopoly for 8years. The license is described as skewed by 2 transport ministers: Hon. Michuki and Hon. Makwere on the daily newspapers. Parliamentary investments committee in their report recommend competition.

2) In 2007,Grain bulk ltd. applies to KPA to extend the monopoly for another 25 years which is rejected by KPA, and KPA board proceeds to resolve that a tender for a 2nd bulk grain facility takes place.This news was greeted with relief as the monopoly operator charges usd 16 per ton while in Egypt for the same type of machinery, the operators charge usd 5 per ton. This comparatively higher handling cost is being passed on to the consumers.

3) After advertisement of the tender, there was surprise to learn of tender cancellation. The reason of 1000 workers losing jobs is a surprise. What the process entails is that the same workers will be carrying out loading manual work at the 2nd facility instead of at the port. This is what the monopoly bulk operator is doing presently as well. So there’s is no issue of job losses. Indeed the Kenya Union of Commercial Food and Allied Workers can attest to this as per attached annex 1. The reason of job losses was merely meant to justify the cancellation. In any case how does one hold millions of Kenyans ransom because of 1000 people? The 2nd facility will in fact create jobs by way of administration staff, technicians, finance staff, drivers, machine operators, technicians, etc similar to the present monopoly operator.

4) The issue of investments by the monopoly holder has presently no basis. It will be recalled that the monopoly holder was given a monopoly for 8 years, during which time he recouped his investment. Having been denied a monopoly extension for another 25years, the monopoly operator now wants to use the investments story. The remaining portion outstanding was after the monopoly operator wanted a further 25 years monopoly that he made a unilateral expansion programme without a binding written KPA commitment to extend the monopoly and now wants to demand a monopoly extension after it had been officially rejected. The majority of the bidders for the 2nd bulk facility have individually indicated that they are not going to demand any protectionism of any kind from the Government as the business is viable and can sustain 2 facilities. Several African countries have 2 or more than 2 operators. Sudan is currently constructing its 3rd grain facility.

5) When vessels arrive, the sole bulk grain operator has on several occasions been unable to cope with the inflow of ships, resulting in huge demurrages which the millers are forced to pass on to consumers. The demurrages range from usd 30,000 to usd 75000 per day! To illustrate, we append a schedule of vessels which were on hold for several days:
SHIPS NAME, SHIPS ARRIVAL DATE, DATE OF COMMENCEMENT OF DISCHARGE, CARGO
WHITE MIST 4/9/2008 7/9/2008 19500M/T MAIZE
ALFA-K 7/9/2008 11/9/2008 28580M/T MAIZE
SPYRO B 11/9/2008 14/9/2008 34000M/T WHEAT
BIANCO VENTURE 19/9/2008 22/9/2008 12000M/T WHEAT
HAWK 24/9/2008 26/9/2008 39000M/T WHEAT
INNES 27/9/2008 7/10/2008 6000M/T MAIZE
AFRICAN PUMA 29/9/2008 NOT COMMENCED DISCHARGE AS AT 7/10 25000M/T MAIZE
KEN GALANT 2/10/2008 " " " " " 41500M/TWHEAT
DISCOVER 2 3/10/2008 " " " " " 16000M/TWHEAT
LIBERTY EAGLE 7/10/2008 " " " " " 43500M/TSORGHUM
DIANA STAR 30/10/2008 10/11/2008 7420 M/T MAIZE

If we take the above schedule and use just an average delay of 3 days multiplied by an average Usd 40,000, multiplied by an exchange rate of ksh 77/= per dollar times the 11 ships is equal to Ksh 101,640,000. This is what is being passed on to Kenyan consumers! Can you imagine the cost? The information above can be independently verified from KPA records, shipping agents, millers and world food programme. In fact the World Food Programme is also complaining due to demurrages as a result of ship delays. They have indicated that the delay is causing them to overshoot their budget in terms of demurrages to owners of ships which means proportionately lesser subsequent relief maize, etc. In effect the monopoly is affecting even the most vulnerable and needy!

LEST WE MOURN BETTER MOBILIZE NOW.