The $29 billion Lamu Port and New Transport Corridor to Southern Sudan & Ethiopia (LAPSSET) project – Kenya’s biggest ever socio-economic venture since independence – is now taking shape and is expected to greatly increase international business opportunities.
The head of corporate affairs at the Kenya Ports Authority, Bernard Osero, told AFKInsider that Lamu port will have 32 berths, with a dredged entrance channel of 18 meters to enable it to accommodate ships of up to 100,000 tons.
“The cost for the short-term plan for Lamu Port Project, including the first three berths, is estimated to be $664 million,” he said.
The country’s industrialization and investment sectors are among those expected to receive a great boost as the project unfolds. It will, in addition, open up remote areas and encourage regional trade with South Sudan and Ethiopia.
The development was planned to be completed by 2016/17, Osero said. This plan, he added, is however dependent on availability of funds. The administration block and other supportive facilities are now nearing completion.
“The role of KPA is to provide technical advice on procurement and tendering while the government provides funds,” Osero said.
KPA is mandated by law to manage all scheduled ports along Kenya’s coastline, but has only one principal port so far — Mombasa.
LAPSSET was launched in March 2012 with the signing of a Memorandum of Understanding for the proposed railway and pipeline between Kenya, South Sudan and Ethiopia. Japan Port Consultants, collaborating with BAC/GKA Joint Venture, had won the tender to conduct a feasibility study on the project’s infrastructural development. Its report proposed construction of new ports on the Kenyan coast, in particular Lamu and Manda Bay.
A master plan for design, development and the tendering documents were then presented to the government. A railway line and highways from Lamu to Juba, construction of an oil refinery at Lamu and an oil pipeline to South Sudan and Ethiopia were also envisaged.
The Corridor is expected to serve Ethiopia’s 85 million-strong population, as well as the 25 million residents of South Sudan.
The success of LAPPSET will also integrate the remote northern, eastern and north-eastern parts of Kenya with the rest of the country’s economy. The project presents a range of business opportunities for local and foreign investors. The main areas being targeted are tourism, agriculture and manufacturing.
“The whole road network in northern Kenya is a nightmare. The situation is made worse by a high level of insecurity due to regular bandit attacks. If LAPSSET will improve the road network, that will solve most of our problems caused by bad roads and lack of basic infrastructure,” said Abdi Mohamed, owner of a fleet of trucks which regularly transport goods to South Sudan.
According to a report prepared by the project coordination secretariat, available investment opportunities will be found through the Free Trade Zones (FTZs) to be established.
These investment opportunities include shipbuilding and repair, and crude oil export facilities. More opportunities will be found in the establishment of oil transport/terminal facilities.
Joseph Wahito, a senior lecturer of taxation and cost accounting at Star College of Management in Nairobi, said that due to the magnitude of this project, the government should embark on streamlining and refreshing laws governing investment to favor investors interested in LAPSSET.
Special Economic Zones (SEZs) and Export Processing Zones (EPZs) — which offer great incentives including tax holidays and investment discounts for both local and foreign investors — are among the special features of the project.
“The government must outline friendly and competitive incentives to make investors find reason to cast their nets in the project,” Wahito said. “This is a very ambitious project. Industries, highways and all aspects of this project will offer a lot of job opportunities to ease unemployment.
The project coordination secretariat report suggests a range of opportunities in food processing industries, fish industries and electric power plants (coal and LNG Fired).
With the first phase of the project – the construction of Lamu Port headquarters – at 80 percent completion, the focus now turns to phase two. This will see the building of police lines and staff houses and is due for completion in June 2014.
It is estimated that by 2020 and 2030, total dry cargo throughput at Lamu and the Corridor will be 13.5 million tons and 24.9 million tons, respectively.
It is also estimated that by 2020, railway freight share will hit 96.1 percent of the total freight on the Southern Sudan-Isiolo route, 93.2 percent on the Ethiopia-Isiolo route, 94.3 percent on the Isiolo-Garissa route and 60.2 percent on the Garissa-Lamu section. These estimates exclude crude oil.
It is further estimated that passengers arriving by train at Lamu will have reached 600,000 per year come 2030. Road passenger volume between Nairobi and Lamu through Garissa will reach 700,000 people by 2030. The report projects that more than seven million passengers will be traveling by road between Nairobi and Isiolo every year. The road network will be improved through a public-private partnership scheme.
A pipeline of 1,065 miles is proposed to run parallel to the highway. It will transmit 500,000 barrels of crude oil per day from South Sudan to Lamu via Isiolo. About 82,400 barrels of refined oil will be pumped back to South Sudan daily. A private entity will operate and maintain the pipeline project.
The coastal region is expected to have a new oil refinery built across 130 acres of land. It will have a capacity to process approximately 125,000 barrels per day. The refinery will be owned and maintained by the private sector.
New cities at Lamu, Isiolo and Lake Turkana have also been proposed. Lamu will have a convention center, fisherman’s wharf, cultural and entertainment centers.
The cost of developing the cities will be met through a public-private partnership strategy. Maintenance will similarly be done through a joint effort between the public and private entities involved. Eco villages in the coastal islands will also be put up. In addition, there will be nature safaris and protection of archeological sites to boost tourism.
A number of airports will be constructed at various towns, with an additional international airport planned to ease the burden of expected increase in air traffic at Mombasa’s Moi International Airport.
The project will increase demand for electric power, which will open up opportunities for investors to venture into various energy supplement projects such as green energy. Ultimately, Kenya will seek to increase reliability of its power supply to support industrialization.