Joho-Linked Firm Loses Sh5.8B Grain Deal at Mombasa Port After Court Ruling

Kenya's Supreme Court has invalidated the contract award for a second bulk grain handling facility at the Port of Mombasa. 

The decision effectively suspends plans by Portside Freight Terminals Limited, a company linked to Mining Cabinet Secretary Hassan Joho, to construct the multibillion-shilling installation intended to challenge Grain Bulk Handlers Limited's established market dominance. The five-judge bench, presided over by Deputy Chief Justice Philomena Mwilu, ruled that the Kenya Ports Authority (KPA) breached constitutional procurement mandates by selecting Portside through a Specially Permitted Procurement Procedure (SPPP). 

"The protection of the supremacy of the Constitution is critical," the judges affirmed, emphasising that "there can be no greater public or national security interest than upholding the Constitution, its values and principles and obeying the law." 

Justices Mohamed Ibrahim, Smokin Wanjala, Isaac Lenaola, and William Ouko co-signed the ruling. The legal challenge, initiated by Busia Senator Okiya Omtatah, centred on the KPA's justification for bypassing a competitive tendering process in favour of SPPP, a provision permissible under the Public Procurement and Asset Disposal Act when national security or public interest are at stake. Omtatah argued that the SPPP lacked transparency and unfairly discriminated against other eligible firms, alleging an intentional exclusion of competition through an expedited timeline and selective bidder consideration.

The court concurred, finding that the KPA did not adequately demonstrate the exceptional circumstances that would render a competitive process impractical or economically unsound. The judges criticised the opacity of the procurement route, asserting that SPPP cannot serve as a shield against scrutiny or competition.

KPA defended its decision by citing the need to bolster national food security through competition in a sector dominated by Grain Bulk Handlers Limited. 

The authority cited operational risks associated with over-reliance on a single service provider and highlighted Portside's ownership of adjacent land and proposal to build a common-user island berth as strategic advantages. The project, valued at $45 million (approximately KSh 5.8 billion), aimed to increase the port's annual handling capacity beyond the current 2.4 million tonnes. The Supreme Court, however, found these arguments unconvincing, reiterating that legal compliance is non-negotiable, even for projects deemed urgent or critical. 

The ruling overturns a prior decision by the Court of Appeal, which had reversed a High Court judgement that similarly faulted KPA's procurement method, reinforcing the principle that legal procedures cannot be sacrificed for expediency.

The Supreme Court's decision also revisits KPA's long-term infrastructure plans. According to a master plan developed in 2004, reviewed in 2009, and formally launched in 2019, the project envisaged a second grain facility, to be developed either at Dongo Kundu or Lamu Port.