FURIOUS: Mombasa ‪Tycoon Mohamed Jaffer Is Cursing Ruto

Mombasa billionaire Mohamed Jaffer is not a happy man as his empire continues to suffer from new policies implemented by the government.

People close to the businessman who spoke to Kenya Insights say the old man is disturbed and cursing President William Ruto and his administration of what he terms as punitive measures targeting his businesses.

Jaffer who has maneuvered through past regimes and maintained a monopoly in the grain handling and LPG industry in Kenya despite massive tax evasion battles with the taxman, seems to have finally been stopped by the new regime.

“Mzee anapiga meza akikumbuka jinsi mambo yanavyo endelea (the old man bangs the table everytime he thinks of what’s going on),” a source told this writer.

In a sharp contrast, Jaffer has benefited from a multibillion oil deal by the government that one would expect him not to be furious about competitive changes but flow with it.

One Petroleum Ltd and Asharami Synergy Ltd firms that are linked to the businessman and his family were recently awarded tenders to supply oil under the controversial G-2-G deal.

According to a recent International Monetary Fund (IMF) brief, by mid-November 2023, oil imports under the scheme amounted to about $3.7 billion (Sh592 billion). Letters of credit worth over $784 million (Sh125.4 billion) were also settled underlining the lucrative nature of the deal for players in it.

Gas monopoly challenged

Jaffer’s goose was cooked when Ruto allowed Tanzania’s tycoon Rostam Aziz the CEO of Taifa Gas Group to set up the 30,000-tonne plant at the Dongo Kundu Special Economic Zone in Likoni, Mombasa a venture which deflated his market grip.

Ruto also announced introduction of subsidized gas that would see prices slashed to the ease of poor Kenyans, this was a direct hit to the income of the billionaire.

Aziz had for years been denied licenses to set base in Kenya and this was attributed to Jaffer’s influence on the Uhuru regime given his close links with Raila Odinga who by then was closely knitted to the government. It didn’t come as a surprise that Aziz who supported Ruto in the campaigns was immediately awarded the licenses to the dismay of Jaffer.

For years, Jaffer through his company African Gas and Oil Company Limited (AGOL) has been able to maintain the hold of liquid petroleum gas (LPG) industry. According to Energy CS Davis Chirchir, the firm controls 75 percent of the country’s gas supply. And now Ruto’s plan for cheaper gas spells doom for the empire that has rested on the monopoly.

Through popular brands; ProGas and Sea Gas owned by his company Proto Energy, Jaffer has been controlling the LPG market in the recent years. The government in 2016 formulated an ambitious plan for cheap gas and launched the Mwananchi Gas Project ‘Gas Yetu’. The announcement of the subsidized gas have hopes to many Kenyans who rely on toxic energy sources such and kerosine and firewood.

Mwananchi Gas project was to sell under the Gas Yetu brand and was meant to safeguard the poor from respiratory diseases caused by the use of firewood for cooking. It was also meant to contain the rampant destruction of forests.

In 2017 Gas Yetu was allocated Ksh2.2 billion for the period 2017-2019. A further Ksh700 million was allocated through a supplementary budget raising the total cost of the project to Ksh2.9 billion.

The project would have seen millions of households receive subsidized 6kg cooking gas cylinders at a cost of Ksh2,000.

5 million households were targeted with the Gas Yetu cylinders fitted with burners and grills.

The beneficiaries would refill them at a cost of only Ksh840 per cylinder.

This ambitious project was strategically shot down and Jaffer was alleged to have used his influence to frustrate it.

End of Mombasa Port grain handling monopoly

Kenya Ports Authority (KPA) has pledged to license a second grain handling facility in the Dongo Kundu Special Economic Zone within two years.
KPA’s decision follows recommendations from the National Assembly Committee on Finance and National Planning aimed at optimising revenue from grain handling services at the Port of Mombasa.

The goal is to liberalise grain handling to eliminate monopoly and promote healthy competition. Transport Prin- cipal Secretary Mohamed Daghar, ap- pearing before the National Assembly Committee on Implementation, chaired by Budalang’i MP Raphael Wanjala, ex- plained the historical context.

In December 1992, Grain Bulk Handling Limited (GBHL), now known as Bulk- stream, was granted permission to install a conveyor belt system for bulk grain han- dling and storage. The construction was completed in February 2000, with a three- year lease commencing that year.

As per the lease, KPA agreed not to allow any other similar facility for eight years to help GBHL recoup its investment. Since then, GBHL has handled over 24.5 million tons of grain from 785 vessels, peaking in 2023 with 3.6 million tons from 101 vessels.

Despite GBHL’s lease exclusivity expir- ing in February 2008, KPA only resolved to liberalise grain handling at the port in April 2008. The facility has a storage ca- pacity of 227,000 tonnes in Mombasa and 134,000 tonnes in Nairobi, with an annual throughput capacity of approximately 6.5 million tonnes in Mombasa alone.

The Parliamentary Committee on Finance and National Planning recom- mended several measures to optimise rev- enue, including fast-tracking the authori- sation of additional grain bulk handlers to enhance efficiency and effectiveness by 2022. Daghar informed the committee

The Parliamentary Committee on Finance and National Planning has recommended several measures to optimise revenue, including fast-tracking the authorisation of additional grain bulk handlers.

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that KPA licensed Portside Freight Termi- nals Limited for a second bulk grain han- dling facility. However, this process has been delayed due to a legal challenge that has been ongoing for the past three years.

Wanjala criticised KPA for the delay in bringing on board a second investor since the expiry of GBHL’s monopoly, highlighting the missed opportunities for job creation. “Why don’t you engage other investors? In Kenya, we have a significant unemployment problem. By bringing in these investors, you will create more jobs, reducing the need for our youth to seek employment abroad,” he said.

Business practices

Nandi legislator Cynthia Jepkosgei called for further scrutiny of GBHL’s oper- ations, describing the company as overly powerful and influential. She emphasised the need for KPA to implement the com- mittee’s recommendations to ensure fair business practices by 2022.

“I want clarity on the lizard that has been fed and it is now a very big snake that swallows people. If you look and dig on the history of how that GBHL Company has been behaving, it is so powerful that someone even ordered for properties of
ATTA to be disposed to GBHL. That tells you how powerful this GBHL is,” she said. Jepkosgei said it is the responsibility of the team at KPA to ensure that the recom- mendations by the committee are imple-
mented.

“The committee gave timelines that by
2022 we should be ensuring that business is fair around KPA. But it looks like a hot potato no one wants to touch it. Everyone is flexing its hands then takes its back” added the Nandi law maker while telling KPA MD to take action.

“You must take decisive action, even if it involves some risks. We, as the govern- ment, will support you,” Jepkosgei stated.

William Ruto, KPA Managing Direc- tor assured the committee that the port would sign a contract for the construction of the port component at Dongo Kundu by the end of the month.

The berth, where ships will dock, will be completed within two years, during which time KPA plans to license another grain handling facility.

Ruto also said that KPA has allocated Sh1.4 billion to resettle 1,648 residents affected by the Dongo Kundu project, with the compensation process nearing completion.