Importers up in arms over cargo transfer rule

By: Gitonga Marete

A directive on transfer of cargo to Container Freight Stations has sparked a major controversy pitting owners against the Kenya Ports Authority.

Importers and clearing agents claim the directive, if implemented, would increase the cost of importing cargo through the Mombasa Port.

Car Importers Association of Kenya chairman Peter Otieno termed the order “illegal”, saying it did not have any backing in law.

In a notice published in the Nation on Friday, the ports authority said the government had ordered it to take full responsibility of selecting stations where cargo was to be sent, starting December 1, 2015.

“All shippers, agents and shipping lines are therefore required to comply with this new government directive and ensure that shipping documents, including manifests and Bill of Ladings, are not endorsed to specific CFSs,” managing director Gichiri Ndua said in the notice.

MISCHIEF

A section of industry players have read mischief in the order, claiming some people were angling themselves to benefit from nomination of cargo to their CFSs. The ports authority did not give the reasons for the order.

“The power to decide where cargo is transferred to after it arrives at a port rests on the importer and not the handler,” said Mr Otieno.

But Association of Importers of Kenya chairman Peter Mambembe welcomed the move, saying it would curtail operations of well-connected individuals and cartels that he alleged have used the facilities to swindle the taxman of millions of shillings by evading tax.

He said freight stations, which were first established in 2008 when the port faced congestion, were being used as a conduit to steal money from the government and sneak in contraband.

Since they came into operation, the facilities have been viewed as a lucrative business, with operators raking in millions of shillings every month.

While CFSs charge an average $50 (Sh5,250) for the 40-foot container and $25 (Sh2,620) for the twenty-foot container per day after expiry of the free period of four days, importers negotiate for extra time with CFS operators.

“There is a lot of collusion in the whole business. Some individuals don’t even pay taxes as their cargo is taken directly to their warehouses,” Mr Mambembe said.

There have been concerns over missed revenue collection by KRA and it is understood that the taxman was behind the order in a bid to seal loopholes.

A clearing agent who spoke to the Sunday Nation claimed the order was a ploy by some KPA officers and owners of CFSs to make it easy for them to send cargo to specific CFSs.

“The facilities are owned by influential people in the government, including some working at KPA and the Kenya Revenue Authority (KRA). What we are seeing here is a scandal in the making. They just want to earn money from storage charges on cargo nominated to their CFSs,” said the agent.

He added: “When an importer clears a container from the CFS, it is Sh10,000 more expensive than if it were cleared at the port. Why should cargo be taken to the CFS if it can be cleared from the port?”

CONTAINERS STOLEN

The directive comes in the wake of revelations that dozens of transit and local containers have been stolen over the past few months, with KRA seals intact.

The CFS Association of Kenya said effecting the order would contravene the rights of importers.

“Stopping nomination of cargo by the importer is not the solution and will only drive up the cost of handling imports,” the association said in a statement.

Contacted for a comment on the matter, Mr Julius Musyoki, the commissioner of Customs and Border Control at KRA, said there was an on-going efficiency and integrity transformation initiative which was being undertaken by a multiagency forum.

“This forum comprises KRA, Kenya Bureau of Standards, KPA, National Police Service and the Interior Ministry, among other players, he said.

SOURCE: DAILY NATION