Exclusive gov't deal transforming Joho's company into a monopoly

Joho's firm will save Sh40 billion which would have been revenue to the government.

File image of Hassan Joho

A logistics firm linked to Mombasa Governor Hassan Joho has landed an exclusive contract with the government to take over operations of the Nairobi Inland Cargo Terminal.

According to details of the deal between Kenya Railways and Autoports Freight Terminals, the Joho firm will exclusively operate the Nairobi Freight Terminals near the SGR station in Syokimau.

A freight terminal is essentially a connecting facility where carriers transfer shipments, and rearrange trucks, in order to route them in the correct direction.

According to the deal seen by Nation, the firm is scheduled to start its operations in October 2021.

Importers will be required to allow Autoports Freight Terminal-Nairobi ferry their cargo from Mombasa to Nairobi by the Joho family linked firm.

The deal gives Autoports a near-monopoly over its competitors.

Competing logistics firms have objected to the deal, stating that the government would lose money and that traders who have long-term shipping contracts with other logistics firms will suffer losses.

The move will eat into ICD share of cargo, which will not only affect private firms in the sector but also government revenues. We’re asking KPA to open the same window to all CFSs as this is an unfair and unbalanced trade deal,” argued Kenya International Freight and Warehousing Association (Kifwa) chairperson, Roy Mwanthi.

Autoports has also leased 26 acres at the Nairobi Freight Terminal for a period of 45 years, backdated to December 1, 2018.

Joho's firm had to part with a Sh78 million leasing fee, Sh19.5 million in annual rent, Sh5,000 application charges, Sh50,000 pegging fee and 3-month security deposit of Sh4.8 million and Sh100,000 in administration fees, bringing the total to Sh103 million.

Further, Joho's firm will enjoy an 80% discount from Kenya Railways in transporting cargo for 10 years and will pay Sh45,000 to ferry a wagon instead of Sh214,700.

Autoports persuaded the KRC board of directors to grant the special rate by pledging to transport 1.6 million tonnes (or 24,615 wagons) yearly.

This means that the Joho firm will pay Sh1.1 billion to transport the 24,615 wagons instead of Sh5.28 billion, meaning a discount of Sh4.17 billion annually for 10 years.

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