Wednesday, 18 December 2013

EAst Africa Infrastructure: Shifting Gears

Design plan of JKIA Green Field  In Nairobi, Kenya
IT IS THAT TIME of the year when we take stock of the past year. We review how much progress we made in economic development in east Africa. The region has enjoyed robust economic growth for much of the last decade which robustness has spilled into the current decade. Rather, bottlenecks defined by the robustness of the last decade are being removed in this one. Chief among all bottlenecks was infrastructure -roads, railway lines, hydro dams, geothermal wells, sea ports and airports.

There is a reason to focus on infrastructure:  Fossil fuels have been discovered in the top three of the five east common market countries. Consequently demand for infrastructure to service this new economic factor has shot up. Some mega projects, which just a few years ago would have been quietly dismissed as pipe dreams are becoming reality.

 Tanzania is so far the leader in discovery of fossil fuel with confirmed 40trillion Cubic feet (TCF) of natural gas. She is targeting 200TCF by 2017 and probably more, later. Tanzania has also exploited some of the gas reserves found in Songo songo in the early 2000s to power cars and generate electricity at home. The other two neighbours Kenya and Uganda are yet to exploit their discoveries.  But even before fossil fuels were found, the region had already identified physical infrastructure as a bottleneck.

 Here is what is going on: Lapsset US $23 billion, Konza Techno city $7 billion, Mombasa _Kampala – SG Railway line Kigali $13.5 billion, Kigamboni city $6.7 billion.  Bagamoyo Port $11 billion, Three Hydro dams in Uganda $ 4.2billion. Total $65.4 billion. That is the total bill for the mega projects.

Karuma Dam Uganda to generate 600MW
The transport sector has a high concentration of mega projects .These include; the US$23 billion Lapsset Corridor, the US$13.5 billion Mombasa-Kampala- Kigali SG railway line and the US$11 billion Bagamoyo Port.  Both the SGR and Lapsset corridor are at the implementation stage.  The first three berths of the 32 berth Lamu Port, ( Lapsset Corridor)  in Kenya is under construction, and so is the high speed Railway line starting from Mombasa, Kenya. As for the proposed Bagamoyo port in Tanzania, funds have been procured. Construction is yet to begin. The mega port will have a capacity of 20 million TEUs a year, perhaps the largest capacity in Africa.

 On a lower scale is the air transport, where the region is also investing heavily. Many projects in this sub-sector are being implemented with some nearing completion.  These include the US$450 million upgrading of Jomo Kenyatta International airport in Kenya. This phase which also includes the construction of Unit 4 of terminal one will end by January 2014.

The second phase which involves of a US$650 million green field terminal   was launched two weeks ago.  Completion of these phases by 2017 will make JKIA in Nairobi the largest airport in Africa with a capacity of serving 20 million passengers a year. Another airport in this  category is the US$650 million Bugesera international Airport in Kigali, Rwanda. The contract is at the negotiation stage.

Also on the cards is the US$ 163 million expansion of Julius Nyerere International airport in Dar-es-salaam. The project is expected to raise capacity of JNIA to 6.0 million passengers a year from the current 1.2 million. The contract has already been signed.

On Sea Ports, the expansion of Mombasa port going on. The port has already been dredged and widened into a mega Port. Berth 19 with a capacity of 200 thousand TEUs  a year is operational while the phase two of the container terminal is  due for completion sometimes in 2014. It is running ahead of schedule. This phase will raise the Port’s capacity to 2.1 Million TEUs a year.

 On roads, the US$ 140 million Kigamboni Bridge in Tanzania, will have the greatest impact. The bridge over the Indian Ocean will link the Dar-Es-salaam city with its Kigamboni  suburb. Kigamboni is lasted for a US$6.7billion Resort City, which will make Dar-Es-salaam the tourist hub in Tanzania.

In energy sector , Uganda leads the pack with a slew of hydro project worth US$4.2 billion. The projects include Karuma Hydro-project with a capacity of 600MW, Ayago Hydro dam also with a capacity of 600MW and Isimba dam with a capacity of 188MW. All projects will cost a whopping US$4.2 billion.  On the completion of the projects in seven years’ time, Uganda will emerge as the giant hydro power producer in the east African common Market bloc.  Her current capacity is 700MW which will rise to 2100MW by 2020. The projects are in construction stage.
Kigamboni Bridge Dar, Tanzania
 In Kenya Lake Turkana wind power project is the largest wind power project in Africa. It will generate some 300MW for Kenya’s national grid. This is 40 per cent of Kenya’s e current electricity output standing at 1250 MW. The US$763 million project is the largest private sector investment in the country’s history. It is funded by both Debt and equity.
Kenya’s electricity generation sector is an investment hotspot.  The country plans to increase its power generating capacity by 17000MW by the year 2030 when it will transit to an emerging economy status. The capacity currently is less than1500MW hence the mad rush to hit targets in just 17 years.  The bulk of this power will come from clean and renewable sources such wind, geothermal and solar sources.

 According to experts in the energy sector, on average, it costs US$2.5 million to produce a MW of electricity. This means that to produce 17,000MW will cost a massive US$42.5 billion for an average investment of US$2.5 billion a year.  In terms of the amount of investment needed, electricity

 For her part, Tanzania’s known potential is estimated at 10GW of which 3.5 GW is hydro. There is some Geothermal whose potential is yet to be determined. However, Tanzania’s power potential keeps changing due to on-going discovery of LNG and Coal. This means that Tanzanian capacity will keep on expanding as more Natural Gas and Coal are discovered. In fact some sources indicate that the future of Tanzania’s energy potential lies with coal and LNG

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