Lapsset Corridor:US$500million down $23billion to go
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| The first three Berths: Contract Out. |
THE KENYA GOVERNMENT has shot the first volley in the proposed development of the Lamu Port South Sudan Ethiopia transport corridor, Lapsset. It has awarded the first contract in the US$23 billion project.
The contract for the construction of the first three berths of the 32-berth Lamu Port will cost US500 million and is fully funded by the Kenya government.
A consortium of Chinese construction
companies led by China Communications Construction Company has won the
contract.
The work includes; the construction of; one general
cargo berth, one bulk cargo and a container berth at Manda Bay, Lamu. Lamu port
is designed to be a mega port, receiving any post-panamax vessel. Consequently,
all berths will be dredged to a depth of 18.5 Metres.
Other works include construction of; a 113 Ha hard standing yard, internal
roads, Administration buildings, slipways and workshops for small crafts and
associated infrastructure such as water supply, storage and reticulation; Power
and ICT infrastructure.The three-year
contract is expected to begin later in the year.
Lappset is the second largest business
venture to be undertaken in east Africa.
Read http://eaers.blogspot.com/2012/07/lapsset-biggest-business-venture-in.html.
The largest is the US$42.5bn electricity generation project in Kenya. Both
projects are pillars of Vision 2030, Kenya's long -term development blue-print
and are expected to be fully functional by then.
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| Oil Pipeline: was first to attract a suitor. It could get sweeter. |
These include; a 1700 Km long high
speed railway line, a 1700 Km long a highway; a 2000KM long crude oil pipeline,
a 120,000 bpd refinery, a 32- berth sea port, three resort cities and two
international airports. Except for the construction of Isiolo international
Airport, which is one of the two international airports on this corridor, other
projects are on the design stage.
Although Lappset
is a juicy venture with returns ranging between 14 per cent and 24 per cent for
some of the projects, doubting Thomasses were waiting for a sign that it is
feasible. Now they have a sign.
The Corridor, to
be developed on a Private- Public Partnership (PPP) basis had attracted a few
suitors but current is expected to spawn renewed interest in the corridor.
Among the first suitors on the scene was Toyota Tsusho, the investment arm of
Toyota Motor Corporation of Japan, has bid for the construction of the US$3
billion, Juba-Lamu oil Pipeline. Read http://eaers.blogspot.com/2012/08/toyota-bids-for-africas-largest-ppp_20.html
.
According to
Reuters, The Development Bank of Southern Africa, DBSA is hitching to be the
lead arranger for the project. The Bank is said to have dangled an offer of
US$1.5 billion to fund the project
Apart from the completion of the three-
berths, another sign of the times is the commercial viability of crude oil
discovery in Kenya, also along the same corridor. Read http://eaers.blogspot.com/2013/02/oil-kenyas-game-changer.html.
This improves the prospects of the corridor from good to Mouthwatering.
In addition to
roads, rails and Pipelines there are also three resort cities on the corridor
whose major goal is to increase tourism in the arid but high potential
lands. However, due to the discovery of
oil along the corridor, these cities are likely to turn into energy cities. Read
http://eaers.blogspot.com/2012/04/awaiting-birth-energy-cities-in-kenyas.html
. Regardless of their changed status, the cities will be developed by the
Tourism Ministry.
Although
components of the project could be developed on PPP basis, a majority of the
components, it seems, will be developed by the government together with its
partners. Even the consultant has recommended that the venture would be viable
if private sector were to lease the infrastructure from the government, rather
than participate in building them.
That is really great Musyoka.
ReplyDeleteBut I need your kind observation that helps in clarifying the role of the Kenyans themselves in the long-run operation of such projects, even under extreme negative situations.
In other words, aren't there any native African, mainly (public), companies that participate, from the start, in establishing such projects for long-run operation and maintenance to reduce dependence on the foreign companies from wherever, hence support your balance of payments in the long-run?
The sanctions of the USA on Sudan, for example, led to the stoppage of our inherited colonial British established railways and airlines because the USA stopped, by its own laws, and as a monopolist, the exportation of core spare-parts to our Sudanese railway and airlines corporations. The operations stopped because we don't have the alternative international windows, and at the same time we don’t have the facilities to produce those, spare-parts and they became a white-elephant on our budget.
I hope you elaborate on this point as a long run strategy.
(Please have a look to such an article, as an example of what I mean, as South Sudan was sanctioned by The Sudan at: http://www.bloomberg.com/news/print/2013-04-22/imf-urges-sudan-to-use-3-billion-oil-payment-to-support-reforms.html
Thanks Musyoka for such interesting article.
I am not sure I Understood your question. However, As the essay shows, the government will be build the infrastructure,and lease it to the private sector to operate. the private sector for instance buy the rolling stock from wherever they choose.
ReplyDeleteThe private sector operators will include both kenyans and foreigners.