18 August 2014

Kenya: Cargo Firm Demands Sh7 Billion From the KAA

A company is demanding Sh7 billion from the Kenya Airports Authority as compensation for lost business following a delay to award it a ground handling licence at Jomo Kenyatta International Airport.

Transglobal Cargo Centre Limited has also questions why KAA managing director Lucy Mbugua has failed to sign its licence despite a decision by the authority's board of directors that it be awarded the permit.

The company, in a letter dated June 6, gave KAA 14 days to issue the licence or it will move to court, and to admit liability for delayed processing of its agreement.

The deadline ends this week.

Transglobal, on July 6, applied for an extension of its already operational ground handling services at JKIA.

"The application was informed by the fact that we had developed and fully equipped a modern cargo handling facility that was unmatched not only within East Africa but also Africa as a whole. Our application was further informed by the fact that despite having the best facility we were disadvantaged vis-a-vis competitors and this hindered realisation of reasonable returns from our huge investment in the facility," Transglobal said in a letter to KAA.

The company was informed in August 2011 that KAA's tender committee had approved the request to operate ramp handling services. A month later, Transglobal urge KAA to take note that the company had applied for an all-inclusive ground handling license, and not just ramp handling.

But before the appeal could be addressed, other companies with similar licences wrote to KAA demanding that Transglobal should not be granted a ground handling licence. Through Murgor and Murgor advocates, Eurocraft Agencies Ltd, Kenya Aerotech Ltd, Kenya Airways, Swissport Kenya (Airside Ltd) and Tradewinds Aviation Services told KAA that its decision to award the licence to Transglobal "did not adhere to strict laid down legal, regulatory and procurement procedures."

The five companies said that in particular, KAA did not issue a tender notice, or advertise for an additional concessionaire, as stipulated in law.

However, Transglobal told KAA in November 2011 that it would not be fair to subject it to differential treatment because other concessionaires were beneficiaries of ramp handling licences. In March 2013, the company raised concern about delay in finalising the ramp concession agreement.

KAA had a board meeting on December 4, 2013 in which it was adopted as a policy that ground handling licences be extended to all licenced transit shed operators, including Transglobal and Siginon Freight, the other company that had applied for and been denied a licence.

The authority then sent Transglobal a concession agreement for signing, and the signed document was returned on May 16, 2014.

On the same day, KAA Corporation Secretary Victor Arika signed the deal, but managing director Lucy Mbugua has not signed her section to date.

Transglobal is now claiming 78 million US dollars in lost revenue.

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