Investments drive up KPA profit by Sh3 billion after years of stagnation

A ship arrives at the port of Mombasa. FILE PHOTO | NMG

By ANTHONY KITIMO
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Summary

• The increase in profit was a significant achievement taking into account the fact that the corporation’s revenue growth has been flat since 2016.
• According to KPA Financial Performance Report for the year ended 2019, KPA recorded increased total revenue from Sh45.358 billion in 2018 fiscal year to Sh53.258 billion last year while total expenditure increased from Sh35.013 billion to Sh53.258 billion in the same period.

The Kenya Ports Authority’s profit increased by more than Sh3 billion to Sh13,886 billion in 2019 with total capital and reserves almost doubling in the past one year.

The increase in profit was a significant achievement taking into account the fact that the corporation’s revenue growth has been flat since 2016.

According to KPA Financial Performance Report for the year ended 2019, KPA recorded increased total revenue from Sh45.358 billion in 2018 fiscal year to Sh53.258 billion last year while total expenditure increased from Sh35.013 billion to Sh53.258 billion in the same period.

The total capital and reserves of the agency almost doubled from Sh123.370 billion in 2018 to $287.492 billion in 2019 fiscal year, while its revaluation reserves almost tripled from Sh39.881 billion in 2018 to Sh111.646 billion in the subsequent financial year.

In 2019, KPA recorded Sh13.886 billion profit before tax compared to Sh10.345 billion in 2018 and Sh10.619 billion in 2017, while 2016 financial year recorded Sh10.469 billion.

The increase in profit is attributed to efficiency at the Port of Mombasa as a result of heavy infrastructure investments.

The report indicates that KPA grants from the government increased from Sh13.041 billion in 2016/2017 fiscal year to Sh16.212 billion in 2017/2018, and then to Sh27.387 billion last year. The grants have been used in constructing Lamu port which is ready for commissioning after completion of three berths. Other projects are expansion of Mombasa Container Terminal 2 (CT2) and equipping the port with modern cargo handling equipment and the rehabilitation of the Kisumu port.

The expansion of the Mombasa port has resulted to the increase of cargo throughput especially on transshipment cargo that also almost doubled from 121,577 TEUs in 2018 to 211,604 TEUs in 2019.

Investment of more than Sh3 billion at the Kisumu port, however, continues to raise questions as the facility only received 41 vessels in 2019 with only one ship handled in December the same year.

Compared to Mombasa port, experts argue that investment at the Kisumu facility may not attain its objective. The number of vessels handled at the Kisumu facility for the 12 months of 2019 totals an average number of vessels recorded at the Port of Mombasa per month.

KPA acting managing director Rashid Salim however expressed optimism that business woukd pick after the completion of construction of Kisumu Phase 2.

“Kisumu port is already in operation after completion of construction of Phase One which included major repair on existing facilities, acquisition of required equipment / machinery and a face uplift of the Port. We expect the Port to be used by regional states once Second Phase, which is set to commence sometime next year, is complete,” Mr Rashid said.

Investment at the CT2 where dredging was taking place is at 56.3 percent completion and is expected to be completed by November 2021, he said.

The construction of the new terminal, Mr Rashid noted, was informed by the need to expand capacity ahead of demand to cope with the exponential growth in containerised traffic where the Port of Mombasa is expected to handle approximately 1.732 million twenty-foot equivalent unit (TEUs) up from the current 1.42 million TEUs by 2023.

The project, undertaken by a Japanese Company, TOYO Construction Company Ltd, involves construction of Berth No. 22 (300 metres long and 15 metres deep) to provide additional capacity of 450,000 TEUs.

KPA is also at advance stage to complete the Kipevu Oil Terminal 2 which commenced in February 2019 and is about 63 percent complete, and is expected to be complete in the next 12 months.

Compared to the old Terminal which could only handle one oil tanker at a time, this facility will now have four berths, hence capacity for four tankers at any one time.

The modern oil facility will accommodate bigger vessels of up to two ships of 170,000 deadweight tonnage and two ships of 120,000 deadweight tonnage consecutively compared to one ship of 110,000 deadweight tonnage on the existing oil terminal, improving on capacity and efficiency on handling energy products hence significant economies of scale.