The Kenya Ports Authority (KPA) plans to review the current charges levied on its services to capture changes such as increased inflation and weakened shilling, signalling a possible rise in costs for importers.
The authority says the current tariff, which was approved effective December 2012, has been in force ever since with several minor changes, but now wants to carry out a comprehensive review.
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The review, KPA explains, will allow it to meet financial objectives relating to the recovery of costs and ensure profitability and operational objectives while addressing service delivery to sustain competitiveness.
The proposed tariff review will also allow KPA to “earn a return commensurate with the risk” of owning and managing Kenya’s ports and inland facilities, according to the agency.
“The overall objective is to meet business demands, respond to changes in operations and business environment and improve service delivery to continue offering competitive port services,” says the KPA.
An upward review will mean increased costs for importers who have in the past seen a cut in the free storage period and a rise in costs of loading and discharging goods such as cars.
The KPA is now looking for a consultant to advise on new tariffs that will run for five years between 2024 and 2028, allowing the port’s charges to reflect changes such as inflation, exchange rate, interest rate and technology.
The consultant will work closely with the KPA management accounting division to obtain information on cost accounts relating to infrastructure development and service delivery to arrive at a cost-reflective tariff.
The four-month assignment will also see the consultant identify and analyse all the KPA operating and non-operating activities and determine the pricing structure for each service rendered by the authority to port users.
The KPA will require the consultant to carry out stakeholder engagements on the proposed review of the tariffs and pick rates covering operating costs, depreciation of assets and generating surplus for future investments.
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Apart from capturing the current operating environment, the tariffs will also factor in new developments in the logistics chain such as Kenya Ferry de-gazettement and its incorporation as a department of KPA and the inland container depot expansion.
The tariff will also factor in the use of Standard Gauge Railway for the offtake of cargo from the port and investments in port and cargo handling infrastructure such as the second container terminal, cruise terminal and the Lamu, Kisumu and Shimoni ports.
KPA will also use the review to capture new revenue streams such as salvage tug, containment boom services and contingency for fire safety as it seeks to grow and diversify earnings. BY BUSINESS DAILY