Row over higher levies on cargo stations, fuel depots

The Mombasa county government has slapped Container Freight Stations (CFS) and fuel depots with higher inspection fees, a move that is likely to trigger fresh protests over the increased cost of business.

The CFSs now face a fivefold increase in annual inspection fees, rising from Sh4,000 to Sh20,000, according to the county Finance Bill covering the financial year to June 2016.

The county government has also hit petroleum depots with a levy of S0,000 per year, up from Sh7,500 paid last year. Cooking gas depots and dealers will now pay an annual charge of Sh10,000 up from the Sh4,000 paid in the fiscal year ended June. Fuel tankers parked at marshalling yards have seen their daily charges doubled to Sh1,500 compared to the present Sh800 a day.

The raft of charges are part of a plan to raise nearly Sh60 billion, mainly from port services, to boost Mombasa county’s coffers and fund maintenance of infrastructure. But cargo owners have warned that the new levies will be a pain to consumers as they will be passed on to them.

The Shippers Council of Eastern Africa, a cargo owners lobby, yesterday said it had written to the county government highlighting the negative effects of the proposed hefty fees on services around the sea port.

“The cost to the economy is enormous. It will raise the cost of doing business and discourage investments,” said Gilbert Langat, chief executive at the lobby.

“This will discourage transit containers from using the port. Shippers will now begin looking at Djibouti and Dar es Salaam,” he said in an interview with the Business Daily. There are about 24 container freight stations in Mombasa, which ordinarily hold containerised cargo leaving or heading into the port.

Mombasa governor Hassan Joho attempted to introduce the new charges in the first year of his term in 2013 but Kenya Ports Authority (KPA) and the national government opposed the move.

Undermine reforms

The central government had opposed the new levies proposed by the county government, warning that they could undermine recent reforms to speed up the clearance of goods through the port.

The higher port user charges come as an added burden for investors who are already paying a 1.5 per cent railway levy charged on all imports through Mombasa port.

For instance, ships will be required to pay a permit fee of $20 (Sh2,040) per tonne of exports and $20 per tonne to clear imports.

Each ship will also pay $60 (Sh6,120) and $300 (30,600) for inspection depending on its size, $60 per square metre for compulsory spraying against disease and $40 per container for verification.

The county will charge $20 for supervision and destruction of condemned goods. Passenger ship carrying between 50 and 100 people will be charged $300 (30,600) while those carrying more than 1,000 people will pay $500 (Sh51,000).

Mr Joho’s administration has also proposed to levy Sh40,000 per year on every branded container that runs through Mombasa county, up from S0,000 being levied at the moment.

Similarly, any branded vehicle will pay an annual fee of Sh15,000, up from Sh12, 000. The port received 1,012,002 containers last year, which stood to earn the county Sh4.2 billion from the verification levy.

Imposition of additional levies risks hurting the profile of the port which faces pressure to expand and boost efficiency after Tanzania started construction work on a new $10 billion (Sh1.02 trillion) port and a special economic zone aimed at transforming the country into the regional trade and transport hub.

The new port in Bagamoyo, which will be Tanzania’s biggest, directly threatens Mombasa’s status as the preferred trade and logistics hub in the region.

The project, backed by China and Oman, will dwarf Kenya’s Mombasa port as Tanzania aims to capitalise on growth in a region seeking to exploit new oil and gas finds.

The Bagamoyo port will be able to handle mega-ships — with a container vessel size of 8,000 twenty-foot equivalent units (TEUs) — after the first phase is completed, with room for expansion.

The whole project including roads, railways and the economic zone is expected to take 10 years to complete, but it was unclear in how many phases it will be carried out.

The port will have capacity to handle 20 million containers a year when completed, compared with Mombasa’s 600,000 and Dar es Salaam’s 500,000 containers. Kenya and Tanzania are caught in a head-to-head race to become the preferred regional transport hub amid massive expansion projects in sea ports, connecting railway and road networks.

Tanzania earlier this year said it plans to spend $14.2 billion (Sh1.4 trillion) to construct a new rail network in the next five years, financed with commercial loans.

Tanzania, like its neighbour Kenya, wants to capitalise on a long coastline and upgrade existing rickety railways and roads to serve growing economies in the land-locked heart of Africa.