Friday, 24 February 2012

Authority awards $640 M contract for Green Field Airport terminal


A Kenya Airways plane : The airline's hub is JKIA


THE KENYA AIRPORTS AUTHORITY , KAA, has awarded a $640million contract for the development of a green field terminal at Jomo Kenyatta international Airport, Nairobi. The terminal will be developed on a design, built .finance, operate and Transfer basis.

At the same time, the authority has entered into negotiations with a consortium of foreign banks for a concessional financing deal for the project. The financing deal is meant to “protect KAA’s interests.” This means that contractor cannot just accept any interest rate from his financiers, but will have to negotiate a financing deal acceptable to KAA. Alternative he will have to accept the financing negotiated by KAA.

Details of who was awarded the contract and the financing deal are still confidential as they have not been signed yet. Nor have the necessary governmental approvals been received by the time of publishing this piece..

The Greenfield terminal to be developed in two phases will expand JKIA’s capacity by 12 million passengers to more than 20 million passengers a year in Phase I. It will have a parking capacity, including “remote parking” for 60 aircraft bringing the total number of available parking slots over hundred aircraft.  

The Greenfield terminal will have a floor area of 172, 000 sq. m. It will be the premier hub terminal in Africa equipped for efficient connectivity for transiting passengers. 

A green field terminal is a terminal where the contractor has a free hand to design the terminal as he deems fit. The contractor is not confined by previous engineering designs. That is why it is awarded on a DBFOT basis.

It will have 50 international and 10 domestic check-in positions; 32 contact and 8 remote gates; an apron with 45 stands and linking taxiways and a Railway terminal. This terminal together with the expanded facilities in the other four-terminals will raise the airport’s packing capacity to more than100 parking bays
The terminal complements a five- year plan that began in 2007 to expand the capacity of the airport from 2.5 million people a year to 6 million to date. The previous expansion plan which incorporates the construction of terminal 4 increased the size by creating a parking for 37 aircraft up from 20 previously. This phase cost a whopping US$200 million.

The new terminal, once complete will make Jomo Kenyatta International Airport, JKIA, the aviation hub of East and central Africa.  In fact owing to its geographical location, Nairobi is the natural aviation hub of Africa. Already the airport is the busiest cargo hub in Africa, handling some 30 Million tones of cargo a year. The cargo is mainly Horticulture and floriculture products from Kenya and the East Africa region.

 Nairobi has become the financial, manufacturing, medical, educational and diplomatic hub in the east and central Africa region. These factors put lots of pressure on the Airport to also modernize and become the aviation hub of Africa.

JKIA is also home base for Kenya Airways, one of the most successful airlines in Africa. The airline operates to 53 destinations, 42 of which are within Africa. There are other 36 international and domestic airlines that operate from JKIA.

Kenya Airways, a listed company in the three securities exchanges in East Africa, has announced plans to raise an additional $262 million through a rights issue. The issue is slated to open in or around June this year. The money will be used to finance its fleet expansion programme over the next ten years. By 2030, the airline plans to have built its fleet to 107 aircraft from the current 37. Already it has placed an order for 9 Boeing 777 dream liners.  

Given such an expansion plan by its natural airline, JKIA would need to expand its facilities to accommodate her. Passenger traffic at JKIA is projected to grown at an average 12 per cent for the next twenty years. It is expected that by 2016, when the green field terminal is expected to be completed, the airport will be handling more than 15 million passengers. To be developed on a PPP basis, the new terminal has an internal rate of return of 16 per cent, a feasibility study established.

The green field project has a phase II. This will be constructed after the second runway which will connect the green field terminal Phase I. Phase II will expand capacity by the same proportions as Phase I. This will raise the size of JKIA to more than 600,000M2

The Airport will be connected to the city by a high speed Commuter railway Line. The linking Railway line will be constructed by Kenya railways Corporation.
The philosophy behind the construction of transport infrastructure such as Airports has shifted from one of building a mere exit –entry points to one of developing an important cog in the economic wheel of a country, says engineer Stephen Gichuki, the Authority’s chief executive. JKIA directly contributes about 10.9 per cent of the GDP, says the authority’s handbook for 2011/2012. However, if its facilitation of growth in other sectors including agriculture, and tourism in all its variants is taken account of, this estimate is conservative.
 For instance, the growth of the airport and its efficiency in cargo handling has led to the growth of horticulture and floriculture industry in Kenya and the entire region. Horticulture is the leading export earner in Kenya and also a significant forex earner in Tanzania, Rwanda and Uganda. JKIA’s efficient systems have enable exports of farm fresh produce to Europe from Kenya and the neighbouring countries.
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