World Grain - October 2008 - 38

FEATURE: IMPORTANT PORT

A cautionary tale of risk
Construction of Grain Bulk Handler's Limited's (GBHL) import
terminal at the Port of Mombasa in Kenya commenced back in
1998 and was commissioned in early 2000 at a cost of $35
million. But the long pre-construction phase illustrated some of
the obstacles any grain or transport business faces when contemplating an investment in an area considered high risk such
as East Africa.
"The concept of public/private partnership was new to the
port and the region, and it took time to nurture," explained Jon
Stokes, finance director at GBHL. "Kenya was not considered an
attractive location for lending, with high associated risk factored
into banks' assessment processes."
As a result, it took seven years from project conception before approval was granted to develop the terminal in the form
of a wayleave agreement from Kenya Ports Authority. Once
from 1.17 million tonnes the year before. Stokes said this was "because of
lower importation of cargo by millers/
traders and NGOs due to the high world
market prices of grain from secondquarter 2007 until year end."
Current facilities enable the reception of bulk carriers up to 80,000
deadweight tonnes using two Buhler
'Portalino' ship unloaders to achieve
discharge rates of 600 tph. Automatic
scales record the weight of discharged
cargo while a 50-tonne mobile crane
and seven bobcats are used for lifting

the wayleave was obtained, it took six more years to obtain
financing.
Stokes says that companies looking to invest in Africa's grain
supply business should be aware of all quantifiable risks and, in
particular, must ensure tax regimes are agreed to and a satisfactory legal framework is in place before proceeding. "A climate
conducive to investment is vital," he added. "Often a private terminal will be taking the place of a state-run service, and hence a
private/public partnership will be required.
"The investor will need to identify the political will for such an
arrangement, together with the supporting regulatory environment. The investor needs to avoid a process which results in delays, tying up and increasing pre-operating costs. It is also crucial
for the government's decision to be based on commercial aspects
and not political."

and trimming, respectively.
The ship unloaders feed long-term
and transit storage silos via fixed belt
conveyors. "We have a record of 13,800
tonnes in a day, but our guaranteed discharge rate is 9,000 tonnes per weather
working day," says Stokes.
GBHL's bulk transit silo boasts 24
silos with total bulk storage capacity of 67,500 tonnes, a flat store shed
with storage capacity of some 14,000
tonnes and two bagging sheds with a
combined capacity of 400 tph, as well
as calibrated bulk delivery hoppers for

road and rail and three weighbridges.
The existing bulk storage terminal has
14 long-term storage silos with a total
bulk storage capacity of 55,000 tonnes.
FORWARD STRATEGY
GBHL's priority is to invest in shipside equipment with the acquisition of a
third ship unloader to double discharge
rates "with attendant savings to customers in freight rates," said Stokes.
The third stage of the company's investment strategy will also see further
investment in storage, building on last

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38

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World Grain - October 2008

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