Kenya is considering lucrative shipbuilding and repair after the completion of two modern shipyards.
The two built by the Kenyan Navy are the largest shipyards with a slipway in East Africa. Their completion opens a new frontier for the country as it seeks to become a maritime hub and tap into the blue economy.
A slipway functions as a platform on which ships are stowed and winched out of the water in a work area for construction, repair, refit and maintenance, while a shipyard is a place where ships are built.
Army-run shipbuilding agency Kenya Shipyards Ltd (KSL) is at the heart of the government’s attempt to ward off fierce competition from Tanzania for lucrative freight transport deals with Uganda and the Rwanda.
In what could be a response to improving Tanzania’s maritime infrastructure, Nairobi has now relaunched its Lake Victoria sea routes and incorporated KSL.
The shipbuilding agency was tasked with meeting Nairobi’s maritime infrastructure needs and dangling the carrot of lower costs and faster delivery of goods to Port Bell, which could divert the Uganda from the Tanzanian route.
What started as an initiative to allow the Kenyan navy to build and maintain its own ships and maritime infrastructure has now become a key part of Nairobi’s decision to uphold the big freight transport agreements with Uganda. and the hinterland.
The Ministry of Defense planned for the Kenyan navy to become autonomous in the development and maintenance of maritime infrastructure. But studies have shown that the Navy will use no more than 30 percent of the infrastructure potential. Opening the facilities to civilian use would maximize the resources injected into the business. And KSL was born.
“KSL was formed, but separated from the Kenya Navy and established as a parastatal company with a mandate to supply all ministries, departments and agencies, regional clients as well as international clients,” said Brigadier Paul Managing Director. Otieno in an interview.
MV Uhuru rebirth
KSL began by refurbishing the 56-year-old MV Uhuru, a vessel owned by Kenya Railways, which carried more than 50 million liters of petroleum products in 26 round trips to Ugandan ports this year.
The MV Uhuru had been at a standstill for over 15 years, and her revival and lucrative trips saw Kenya Railways order a new vessel from the shipyard.
But as Kenya and Tanzania scramble over logistics deals on Lake Victoria, landlocked Uganda is the ultimate beneficiary, with fuel transport costs down 33%, and freight can now arrive at Port Bell in less than half the time it takes on the road.
Trucking companies charge an average of 33 Ksh ($ 0.29) to transport a ton of oil to Uganda, for a two-day trip. Today, Kenya Railways carries the same cargo in nine hours by boat, earning $ 10,826 for every kilometer. For Port Bell, which is 270 kilometers from Kisumu, that means Kenya Railways grossed around Ksh 327 million ($ 2.923 million) between March and May 2021.
“The time required to cover the distance from Kisumu to the ports of Uganda and Tanzania has been cut by almost half. Transport costs have also fallen. Initially by road, they charged $ 0.25 per tonne per kilometer. It was reduced to $ 0.17 per ton per kilometer on the water, which was shorter and that’s why we have a lot of business. And that’s how the requirement for a second railcar ferry emerged, ”said Brigadier Otieno.
The MV Uhuru can now carry 22 wagons with a capacity of 70,000 liters, more than four times what an average truck carries. This means that it would take four trucks and at least two days to transport the oil that the 91-meter-long MV Uhuru can transport in nine hours.
The MV Uhuru first made trips between Kisumu, Jinja (Uganda), Mwanza and Musoma (Tanzania) before the fall of the first East African Community in 1977. Kenya retained the MV Uhuru while A sister ship, the MV Umoja, has been entrusted to Tanzania.
Kenya Railways has placed an order for a new vessel that can carry up to 24 wagons. Construction began in May when President Kenyatta, his Burundian counterpart Evariste Ndayishimiye and African Union infrastructure envoy Raila Odinga inaugurated the Kisumu shipyard.
Dubbed the MV Uhuru II, the new ship will cost Ksh 3.5 billion when completed in June 2022. KSL is expected to earn $ 1.8 million from the construction of the MV Uhuru II, its first major revenue-generating project.
The MV Uhuru II will be the first ship to be assembled locally in almost 70 years.
“We billed the customer (Kenya Railways) $ 31.48 million. Our mandate is to be sustainable and efficient in carrying out our core functions. So we are also supposed to generate income. Of this amount, I estimate that approximately $ 2.69 million will be revenue generated for Kenya Shipyards Ltd, ”said Brigadier Otieno.
Following a directive from President Kenyatta, all government maritime requirements will be met by KSL. This means that the ships, piers, jetties and other infrastructure will come from and be maintained by the parastatal company.
Kenya embarked on a similar project to Mtongwe in September 2020, which involves building a slipway shipyard with a capacity to handle vessels over 4,000 tonnes and 150 meters in length.
Currently, Kenyan ships that require repairs are entrusted to private companies such as SECO Marine and Offshore Engineering in Mombasa, or overseas, which is expensive.
In Kisumu, KSL operations have already started benefiting residents as 530 residents work to assemble the MV Uhuru II. Brigadier Otieno estimates that once KSL is fully operational, at least 3,000 jobs will be created.
“Shipbuilding is essentially an assembly industry. You bring steel; you build the hull of the ship. You get, for example, Rolls Royce engines, you get generators from Caterpillar, you get radars from Japan. We used to get all this manpower from overseas, which meant currency issues. Much of this component will be done locally, ”said the CEO of KSL.
Damen Shipyards, a Dutch company that supplies the Kenyan navy with ships, is building the MV Uhuru II, but KSL intends to use the project as a starting point to fully rely on the locals.
Additional reporting by Antony Kitimo