A Kenyan Port Deal Could Increase DP World's Presence in East Africa
In the recent past, DP World has been in an overdrive to acquire Indian Ocean ports. Particularly, DP World appears intent to have a firm grip on the African market. However, in the race to ink more deals, DP World is no stranger to controversy, either in the manner it acquires the ports or its style of port management.
In June, details emerged that the Kenyan government was in advanced negotiations for DP World to take over some of its key ports and logistics facilities.
A deal appears to have emerged from Kenyan President Uhuru Kenyatta’s February visit to UAE (United Arab Emirates), where he met with a delegation led by Sheikh Mohamed Bin Zayed Al Nahyan, UAE’s Crown Prince.
Almost a month later, Kenya’s finance ministry entered into a concession with DP World ahead of a UAE delegation visit to Kenya on May 10.
“On the basis of the appointment of DP World by the UAE government, as their sole agent who will obtain the right to undertake the development, operation, management and expansion of transport logistics services, the GOK (Government of Kenya) formally request DP World to submit one detailed commercial proposal (of the project),” Kenya’s Finance Minister Ukur Yatani wrote in a letter dated March 30. The letter was addressed to Sultan Ahmed Bin Sulayem, the Chairman of DP World.
Although the implementation of the concession will depend on the incoming government after national elections scheduled in August, the concession has raised an uproar due to its secretive nature and its avoidance of the requisite bidding processes stipulated in Kenyan law.
The concession could give DP World operating concessions at Kenya’s major ports, including Mombasa, Lamu and Kisumu.
At Mombasa Port, DP World is to be allocated four berths which currently are unable to handle container operations. Under the proposal, DP World would turn them into a modern multipurpose terminal capable of handling one million TEU.
At Lamu Port, DP World is set to operate three berths and develop a 500 hectare parcel into a special economic zone, mainly focused on agricultural activity and servicing the Lamu corridor (the highway that connects the port to Ethiopia and South Sudan).
In allaying fears that Kenya could be auctioning her strategic national assets in the DP World deal, Ukur Yatani told local media that Kenya ought to collaborate with renowned port development companies to have a competitive edge in logistics.
“In this case, we have a standing bilateral and economic cooperation with UAE and have narrowed down to a number of sectors where UAE has an advantage such as logistics, ports development and several other areas,” said Yatani.
If the concession is put into effect, DP World could have a massive presence in East African ports.
It already has a majority stake of 51 percent at Berbera Port in Somaliland, which is intended to connect Horn of Africa trade to the Middle East. Last year, DP World was also tasked to develop a deep-sea port at Banana, situated along the Democratic Republic of Congo’s Atlantic Coast.
In addition, DP World is making significant inroads in the Southern Africa region. This week, DP World-owned Imperial Logistics received approval to acquire a 100 percent stake in Mozambique-based logistics company J&J Group. The company has an extensive cross-border trucking fleet connecting Mozambique, Zambia and Zimbabwe to South African ports.