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Chinese Firm Offers to Finance Lamu Port Plan

02 Oct 2011 | Kenya | Source : AllAfrica News: Kenya

Mark Agutu

1 October 2011

A Chinese company has expressed interest in financing the construction of Lamu Port and its related infrastructure.

The firm, JS Neoplant Company Limited of Shanghai, has said it is "ready, able and willing" to undertake the massive project whose cost had been estimated at US $16 billion (Sh1.4 trillion).

The acknowledgement is contained in a confidential letter dated September 21, 2011, a copy of which was made available to the Sunday Nation.

The letter, signed by JS Neoplant Company Ltd managing director Charles Kim, is addressed to both the governments of Kenya and South Sudan that are joint partners in the venture.

In particular, JS Neoplant expresses interest in undertaking construction of the port, an airport, a railway line, a road network, an oil refinery and a pipeline.

"We JS Neoplant Co. Ltd... hereby declare that we have an excellent financing programme and engineering capability to undertake the projects on a EPC/BOT on the back of sovereign guarantee."

The firm states that it is ready to apply for a suitable project financing programme in respect of the Lamu Port project and its other indicated appendages.

According to the communication, the six components of the project include a sea port straddling some 750 acres of land with 10 container terminal berths and three bulk cargo terminal berths, an oil jetty and an international airport with a 2,000 person-per-day capacity on 10 daily flights.

Other components are a three-limbed 1.4m gauge railway line for high speed trains: the limbs are Lamu-Isiolo-South Sudan (1,400km); Nairobi-Isiolo-Moyale-Addis Ababa (1,596km) and Lamu-Mombasa (350km).

The pipeline too had three phases: South Sudan border-Lamu-Isiolo (1500km); Nairobi-Isiolo-Moyale-Addis Ababa (1400km) and a branch to link Lamu to the existing Mombasa/Kampala pipeline.

The project also includes three stretches of highway: Lamu-Isiolo-South Sudan border (1400km); Nairobi-Addis Ababa (1596km) and Lamu-Mombasa (320km).

A fibre optic cable running along the highway completes his gargantuan regional project.

Last month, President Kibaki gave an indication of the impending commencement of the construction work with a promise to undertake a ground-breaking ceremony "soon".

"The feasibility study for Lamu Port and supporting infrastructure is now complete... I look forward to soon undertaking the ground-breaking ceremony for the project," point he said in Mombasa a week ago when he visited the town to open this year's Agricultural Society of Kenya show.

President Kibaki mandated Kenyan ambassadors to aggressively market the proposed second transport corridor that would serve Ethiopia and South Sudan.

Several countries including Canada, Germany, China, Japan and United Arab Emirates have made inquiries since the government declared its intention to construct the corridor about three years ago.

The corridor has immense political and economic potential and will open up large sections of the country's North Eastern and Eastern provinces that have for years enjoyed scant attention in terms of business opportunities.

"I urge you to focus some energy on promoting investment in this project in your respective areas of accreditation, as it is expected to play a major role in catalysing Kenya progress towards the achievement of the economic goals," Mr Kibaki told the ambassadors.

Japan Port Consultants has completed a one-year feasibility study on the development of the port and Lamu-South Sudan-Ethiopia Transport corridor.

With the anticipated entry of South Sudan and even Sudan into the East African Community, estimates put unrestricted demand of cargo rising by more than 32 million tons per annum - far above what Mombasa Port alone can handle.

South Sudan has always relied on Port Sudan in Sudan to the north.

The Ethiopian market, the other target, is currently served by Djibouti port. Lack of good roads connecting Kenya and Ethiopia, with a population of 80 million, has hampered the trade between the two nations.

Ethiopia's dependence on imported goods has meant that Djibouti port handles 98 per cent of Ethiopian traffic which is about 85 per cent of all the traffic in through the port.