A dispute is looming over the control of the Sh5 billion Lamu Port after the Auditor General raised concerns about the absence of a clear agency mandated to oversee its operations.

The latest audit report shows that several government bodies and private companies are currently using the facility without formal agreements on management and ownership.

According to the report for the year ending June 30, 2024, the Lamu Port-South Sudan-Ethiopia Transport (Lapsset) Corridor Development Authority occupies large portions of the port, including residential flats, office blocks, and a police station.

At the same time, other state agencies and private operators have taken up offices within the administration block.

These include the Kenya Ports Authority (KPA), Kenya Maritime Authority, Kenya Coast Guard Service, Express Shipping and Logistics, and Seaforth Ship Agency Experts East Africa.

Auditor General Nancy Gathungu warned that the lack of clarity on control could spark disputes over asset ownership and undermine the project’s future.

“There is a lack of clarity on the responsibilities of the different stakeholders of the corridor,” she said.

The report added that without proper internal controls, the risk of jurisdictional conflicts and mismanagement remains high, which could further erode public confidence in the mega project.

The audit further revealed that budget allocations for Lapsset projects were sent directly to various implementing agencies instead of a central authority.

For example, money for port construction was directed to KPA while road projects were funded through the Kenya National Highways Authority.

Gathungu’s office also flagged governance failures and financial irregularities within the Lapsset Corridor Development Authority.

Among the breaches cited was employee compensation that far exceeded the legal threshold. Staff salaries consumed 64 per cent of the authority’s revenue, almost double the 35 per cent ceiling provided under public finance regulations.

The slow pace of physical progress was also highlighted as a major concern.

While three berths at Lamu Port are operational, full cargo handling capacity remains limited due to incomplete road and transport links.

Critical highways such as Lamu-Ijara-Garissa-Isiolo and Isiolo-Maralal-Lokichar have stalled or are yet to commence, frustrating efficient cargo evacuation and crippling the port’s effectiveness.

The Auditor General cautioned that without urgent steps to clarify responsibilities, streamline financial management, and complete supporting infrastructure, the viability of the Lapsset corridor project is at risk.