The Supreme Court of Kenya has revoked a government-issued licence granted to Portside Freight Terminals Ltd, a company linked to the family of former Mombasa Governor Hassan Joho.
The licence, which allowed the firm to construct and operate a second bulk grain handling facility at the Mombasa port, was declared unconstitutional.
The decision followed a petition by Busia Senator Okiya Omtatah, who argued that the Kenya Ports Authority (KPA) had employed a flawed procurement process that excluded other potential bidders. The project, valued at approximately Sh5.8 billion (US$45 million), has now been invalidated by the country’s highest court.
The judgment was delivered by a five-judge bench of the Supreme Court led by Deputy Chief Justice Philomena Mwilu, alongside Justices Mohamed Ibrahim, Smokin Wanjala, Isaac Lenaola, and William Ouko.
Deputy Chief Justice Mwilu emphasised the court’s stance on constitutional supremacy: “In other words, the protection of the supremacy of the Constitution is critical, and there can be no greater public or national security interest than upholding the Constitution, its values and principles, and obeying the law.”
Senator Omtatah, who filed the suit, accused KPA of favouring Portside Freight Terminals Ltd by using the Specially Permitted Procurement Procedure (SPPP) rather than an open tender. He said this method was used “to deliberately lock out competition” and reward political allies.
KPA, on its part, defended the use of SPPP, citing Section 114A(2) of the Public Procurement and Asset Disposal Act (PPADA), which allows for direct procurement under special circumstances, including national interest or urgency.
Mr Yusuf Abubakar, director of rival firm Heartland Terminals Ltd, argued that the process was discriminatory. “Other companies were unfairly excluded because their bids were never considered under the adopted SPPP method,” he said, adding that Portside was given an unfair advantage.
The ruling, issued in June 2025 and reported in the Daily Nation on Tuesday, 1 July 2025, concluded a protracted legal battle. The disputed licence, issued in 2019, had faced multiple legal challenges before reaching the Supreme Court.
The case revolves around the Mombasa port, East Africa’s busiest harbour. The proposed facility was to be developed on land adjacent to the current terminal operated by Grain Bulk Handlers Limited (GBHL). The new terminal was expected to increase the port’s grain handling capacity to four million tonnes annually.
The government and KPA had argued that the move to license a second bulk grain handler was aimed at ending GBHL’s decades-long monopoly, improving port efficiency, and enhancing food security.
KPA stated that Portside was selected due to its readiness, ownership of adjacent land, and a proposal to build a common-user terminal, which would reduce reliance on a single provider.
However, the court held that this justification was insufficient to bypass constitutional procurement requirements. “KPA failed to demonstrate exceptional requirements that would have justified deviation from open tendering,” the judges ruled.
They affirmed that all public projects must follow a process that is “fair, equitable, transparent, competitive and cost-effective,” except under strictly defined exceptional circumstances.
The judges added: “Although SPPP is an alternative to open tender, it must truly be seen, in terms of the Constitution, as a system that is fair, equitable, transparent, competitive and cost-effective, without the other elements of open tender.”
The Supreme Court concluded that KPA had violated the Constitution by failing to open the project to competitive bidding.
This landmark judgment reaffirms that state agencies must strictly follow procurement laws, even for projects deemed to be of strategic national interest. The court clarified that Section 114A of the PPADA does not grant a blanket exemption from public tendering unless there is a demonstrable and justified emergency or national crisis.
As a result of the ruling, Portside Freight Terminals Ltd can no longer proceed with the Sh5.8 billion project. The judgment also reinstates Grain Bulk Handlers Limited as the sole operator of the bulk grain terminal, maintaining the status quo the state had sought to change.
Senator Omtatah welcomed the verdict, saying: “This is a major victory for the Constitution and a warning shot to public bodies that procurement shortcuts will not be tolerated, no matter the size or strategic nature of the project.”
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