Business

Lamu project cost to be shared

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By JEFF OTIENO

Posted  Saturday, February 18  2012 at  16:12
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Countries expected to benefit from the construction of the Sh21.5 billion ($253million) Lamu-Southern Sudan-Ethiopia Transport (LAPSSET) Corridor will have to foot part of the budget, it has emerged.

There is fear that some parts of the project, among them, a highway, a railway line, a pipeline and a port, might delay, or even stall, if benefiting countries do not commit funds from their national budgets.

To minimise financial difficulties, the LAPSSET master plan report proposes that Kenya, South Sudan and Ethiopia share part of the cost, even as they seek donor funding. The plan report also acknowledges that some of the projects might not be completed on time if funds are unavailable.

Possibility of undertakings of the public infrastructures depends entirely on fund and budget availability and proactive involvement of the government of Kenya, said the report. President Kibaki will conduct the groundbreaking ceremony of the multimillion-dollar project, on March 2. Prime Minister Meles Zenawi of Ethiopia and Salva Kiir of South Sudan are expected to attend the function. The ceremony will mark the commencement of the construction of the Lamu port.

LAPPSET is expected to enhance regional trade, not only linking East African countries by making movements of goods and services easier, but also opening up sections of the hinterland that have remained underdeveloped due to poor infrastructure.

The report acknowledges that since the cost of the project is comparatively large compared to Kenya’s past Gross Domestic Product (GDP) and national budget, co-operation of neighbouring countries is indispensable in the construction of the Lamu port, railway and highway.

Though construction of oil refineries and resort cities are usually made through private investment, the report proposes that part of the investment be borne by neighbouring countries that will benefit from LAPSSET.
It suggests that Southern Sudan help fund crude oil pipeline, and both Southern Sudan and Ethiopia give Kenya a helping hand in the construction of an oil refinery, under the coordination of the LAPSSET Corridor Authority.

Already a high level delegation from South Sudanese has visited Kenya and held discussions with government officials on the construction of the 1,715 km crude oil pipeline.
Initially South Sudan had planned to finance the construction of the whole pipeline, with Kenya granting the right of passage. However, Kenya’s role is expected to be much broader given its experience in construction and expertise in maintaining an oil pipeline.

The urgency to construct the pipeline increased after South Sudan announced that it no longer intends to export its crude oil through Northern Sudan. Africa’s new nation wants the pipeline (1,288 km long in Kenya, 427 km in Southern Sudan) with a capacity of 500,000 barrels per day be built within 18 months.

Part of the crude oil — 417,600bbl/day — is to be exported from Lamu Port. Crude oil exporting pipelines are planned from the Lamu Tank Terminal located to the north of the Lamu Port to the two Single Point Mooring Buoys (SPMBs) at the outer channels through Pate Island, adds the report.

Another pipeline, for refined oil (diesel 52 per cent, kerosene 29 per cent and gasoline 12 per cent), with a capacity of 82,400 bbl/day will also be constructed.


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