Lapsset Corridor:US$500million down $23billion to go
|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.
|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.