The South Sudan government has forced President William Ruto’s administration to back a firm associated with the family of former Mombasa Governor Ali Hassan Joho to handle cargo destined for the neighbouring country from the Mombasa port via the standard gauge railway.
Juba pushed Kenya to support the lucrative deal that has seen Autoport Freight Terminals Limited handle all South Sudan imports at its Nairobi Freight Terminal (NFT).
This is part of the deal that saw Kenya reverse a September order that restricted the clearance of cargo and related operations to the Port of Mombasa.
A communique from the ministry has informed Kenya Ports Authority (KPA) and Kenya Railways that Autoport Freight Terminals Limited will continue to be the sole handler of South Sudan cargo, according to a letter seen by the Business Daily.
Autoport is associated with the Joho family and was at one time a target of the government over alleged tax evasion.
The man behind the firm is the former governor’s elder brother, Abu Joho,
Autoport had won the South Sudan contract on the strength of its deal with Kenya Railways offered it a terminal at the Nairobi Inland Container Depot, which is connected to the SGR and allowed the easy evacuation of cargo from the Mombasa port.
On September 13, after being sworn in as the fifth President of Kenya, Dr Ruto issued an executive order directing that all clearance of cargo and attendant operations revert to the Port of Mombasa.
This was in accordance with the promise he had made to the coastal people during the campaign period.
But South Sudan was uncomfortable with the directive and wanted an arrangement where their traders would be free to clear imported goods at any of the two dry ports, Nairobi and Naivasha.
Dr Ruto was forced to reverse the directive early this month following a visit to Juba as Nairobi moves to ensure South Sudan retains the Port of Mombasa as its main point for transhipment cargo.
Should it have failed to broker a deal, South Sudan had threatened to transfer business to the Djibouti route, in what would have denied Kenya revenue on 1.1 million tonnes of cargo that the facility handles annually.
Mombasa has been the main route for all consignments destined for the landlocked country and South Sudan now says Port of Djibouti is shorter.
The deal comes as a boost to the standard gauge railway, which is likely to benefit from the move should Juba opt to clear its goods in any of the ICDs.
The previous government had moved cargo clearance to ICD in Naivasha and Nairobi as a way of boosting revenue to repay the $5.1 billion Chinese loan used in putting up the infrastructure between Nairobi and Naivasha.
Juba insisted that Autoport be part of the deal inked between Dr Ruto and South Sudan President Salva Kiir.
In 2021, Autoport took over operations of a taxpayer-funded inland cargo terminal in Nairobi.
It received a near-exclusive right to use of the Nairobi Freight Terminals (NFT), strategically located near the Standard Gauge Railway (SGR) terminal in Syokimau.
Autoports convinced the KRC board of guaranteed business volumes promising to move 1.6 million tonnes (or 24,615 wagons) annually.
This deal prompted the South Sudan government early this year to offer Autoport the contract to handle all South Sudan imports at the NFT.
Different companies had been handling South Sudan cargo, but there were complaints of inefficiency. That made the government in South Sudan change agents and tapped NFT as its only cargo handler.
The deal meant that cargo that passes through the port of Mombasa destined for South Sudan will be cleared in Nairobi, thus increasing volumes to be ferried on the SGR.
South Sudan is second after Uganda in the use of Mombasa port, accounting for 9.9 per cent of transit volumes.
Uganda accounts for the lion’s share of 83.2 per cent while the Democratic Republic of Congo, Tanzania and Rwanda account for 7.2, 3.2 and 2.4 per cent, respectively.