KPA on the spot for paying Sh715m for land it owns

Kenya Ports Authority (KPA) is once again on the spot following its intention to pay Sh715 million for a disputed land that it owns.

The payment arises from a dispute regarding a lease agreement between the parastatal and a private company associated with a prominent businessman.

Records obtained by the Nation indicate that Memphis Limited has obtained an arbitration award of Sh715 million, to be settled by KPA following a dispute over a lease of a seven-acre plot that was to run for 33 years.

The dispute stems from an agreement that KPA had entered into with the company for the property, LR Mombasa/MN/VI/4770. The land was to be used to develop a container freight station (CFS), light industrial use, go-down and offices. The lease agreement also provided that the firm was to develop the property within two years of taking possession.

The firm took possession of the plot in 2009 upon which it was required to bear the cost of constructing street lighting, sliding roads, drain waters and sewers and to maintain the same.

The firm was to pay periodic stand premiums to KPA but only honoured payment in part. Documents indicate that the firm had intended to put up a liquefied petroleum gas project.

However, the available documents suggest that by 2017, no developments had taken place and the firm did not seek an extension of the lease to make the improvements.

KPA in 2017 repossessed the land to build a public road from Mombasa port to Kipevu prompting the firm to raise objections. Confronted with the objection, KPA is alleged to have proposed that it could consider compensation.

Memphis Ltd, while claiming breach of contract, moved to Court in 2018. The case was however referred to an arbitrator, who, after hearing both parties, held that the firm is entitled to compensation worth Sh715 million.

Now, two Mombasa residents have moved to the court seeking to stop payment of the money to the firm, accusing KPA of failing to follow due diligence to protect taxpayers from losing millions of shillings in what they termed an irregular payment. Activists Caleb Ngwena and Millicent Adhiambo have sued KPA and Memphis Ltd and want the decision of the arbitrator awarding the firm the millions quashed.

Mr Ngwena and Ms Adhiambo argue that, in arriving at that decision, the arbitrator failed to frame key issues of the breach of the lease by Memphis Ltd. The two argue that the arbitrator awarded quantum based on the entire property, yet only a small portion measuring 0.7 acres was used for the public road.

In the case filed before the Environment and Land Court in Mombasa, the petitioners are accusing the arbitrator of relying only on the valuation report provided by the firm.

Through their advocate Maurice Mkan , the petitioners are also accusing the KPA of failing to appeal against the arbitrator’s decision.

The case will he heard on May 6.