Kenya charts new course to transit business with plan for Lamu harbour

Kenya is inching closer to positioning itself as the regional hub for the lucrative transit and trans-shipment business as the Government prepares to start the construction of the second transport corridor at the Lamu Port.

The firm that will carry out feasibility studies for the second transport corridor, will be identified by mid next month, Transport ministry officials said.

Maritime experts said the future of Kenya in transit and trans-shipment business lies on the construction of the Lamu port, due to its deep waters that can accommodate the current generation of post - Panamax vessels.

Narrow channel

Construction of the integrated second transport corridor, with six major components connecting Lamu port to Southern Sudan and Ethiopia will also open up the dry northern parts of Kenya, which have been marginalised since independence.

The narrow channel at the Mombasa port cannot accommodate huge vessels even with the planned expansion, according to the Kenya Ports Authority (KPA) harbour master, Capt Khamis Twalib, who said Mombasa will be relegated to a feeder port.

The Port of Mombasa is already developed to near- full capacity, the lead advisor to the second transport corridor, Dr Mutule Kilonzo, said in an earlier interview.

The port was designed to convey 20 million tonnes of cargo a year.

But with the entry of Southern Sudan alone into the region’s economy, estimates put unrestricted demand of cargo rising upwards of 32 million tonnes per annum, Mutule said.

This port will therefore not sustain the growing need for access brought about by the heavy demands of Southern Sudan and Ethiopian markets.

“It has been recognised for a long time now that Kenya, as the principal gateway to the sub-region, needs an alternative port which was identified by a study carried out in 1975, citing Lamu as a suitable alternative,” Mutule said.

Ship manufacturers are currently making large vessels, which can carry up to 10,000 twenty foot equivalent units (Teus) to reduce the freight cost.

Port with narrow channels such as Mombasa which can handle ships of capacity of less than 3,000 Teus will be relegated to feeder ports.

There is therefore an opportunity for shipping lines and cargo owners to gain a cost advantage by consolidating traffic in ports that can accommodate large vessels such as South Africa, Djibouti and Lamu for distribution to smaller ports, Mr Mervin Chetty, the chief strategists of Transnet Port Terminals in South Africa said.

Just four months after its launch, the Port of Ngqura in South Africa, which has deep waters and capacity to accommodate post- Panamax vessels is already making significant strides in transshipment market in South Africa.

“The port would move Sub-Saharan Africa away from its current multiple gateway system of medium sized ports, towards the model of a transshipment hub with large gateway feeder ports,” Chetty said.

The proposed Lamu port will also be able to handle super post-Panamax vessels because of its deep natural channel — 18 metres in depth—and will be one of the largest ports on the continent, also serving as a trans-African port, according to Mutule.

It will serve Kenya, the East African Community, Southern Sudan, Ethiopia, the Central African Republic, DR Congo, Congo-Brazzaville and Chad. According to maritime analysts, the port will overshadow other harbours in the region.

“Due to its ability to handle the super post-Panamax vessels that can carry more than 8,000 Teus compared with 3,000 Teus Mombasa is doing, the new Lamu port will target a unique clientele,” said Dr Mutule.

The Lamu port will also open up new business opportunities in Southern Sudan and Ethiopia. According to Mutule, the two markets alone justify the construction of the corridor.

Lamu has many advantages as a potential alternative port to serve the sub-region.

Its direct line of sight with Addis Ababa allows for the shortest railway link between the two cities.

According to Mutule, the port of Mombasa and the existing road and rail network cannot possibly handle the massive volume and weight of materials that will be required for the Southern Sudan reconstruction.

Southern Sudan relies on Port Sudan in the Northern Sudan and based on the history of the two countries, South would welcome an alternative, according to Mr Mutule.

“The distance between Juba and Port Sudan is about 4,000 kilometres while the distance between Juba and Lamu is only 1,500 Kms,” he said..

The new corridor is also targeting Ethiopian market, 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 made Djibouti port serve 98 per cent of Ethiopian traffic which is about 85 per cent of the whole port traffic.

According to a study done last year, opportunity exists for alternative for Ethiopian cargo.

The study by the African Trade Policy Centre (ATPC) indicated that there are exorbitant charges incurred by Ethiopia at the Port of Djibouti.

High cost of charges, reduced free time for imported cargo and inadequacy of storage facilities are some of the factors that exaggerated Ethiopia’s total logistic cost for its import and export of commodities, the study said.

“The estimated total transit costs have been consuming over 16 percent of Ethiopia’s foreign trade value which is about two million dollars per day, which literally bleeds the economy,” the study said.

Ethiopia has for a long time challenged Kenya to open up a road linkage through Moyale border town.

Indeed, Ethiopia did complete the building of a good tarmac road from Addis Ababa to Moyale quite a while ago.

Kenya has not only agreed to build a road link with Ethiopia but recent discussions between the Heads of State of the two countries reached an agreement to also build a railway linkage.

The African Development Bank (AfDB) early this year agreed to lend Kenya Sh12.5 billion for tarmacking 123 kilometres between Marsabit and Turbi, along the highway to Moyale town.

Ethiopia is similarly searching for a way to link up with Southern Sudan, according to Mr Mutule.

“But, in the view of the difficult terrain on the borders of the two countries, that linkage is best made through Kenya,” he said.

The two countries have already agreed to connect via railway and oil pipeline through the Kenyan network, he added.

Although Djibouti port is located at the crossroads of one of the busiest shipping routes in the world, linking Europe, the Far East, Africa and the Arabian Gulf, Lamu port will have several advantages.

Djibouti has a smaller quay length of 900 metres, which can be extended up to a maximum of 1,050m whereas the Lamu port will have a quay length of 3,500 million, nearly triple that of Djibouti.

Djibouti has 11 berths while Lamu will have 22. Djibouti has the capacity to handle seven million tonnes of cargo per year, while Lamu will handle 35 million tonnes, five times more, the consultant said.

The second transport corridor dubbed Roola will have a super highway railway line stretching from Lamu, passing through Garissa, Isiolo, Mararal, Lodwar, and Lokichoggio and branching from Isiolo to Juba, Addis Ababa and Nairobi.

Its other components include a pipeline from Juba to Lamu on both ways and a merchant refinery in Lamu.

There will also be a super highway that will connect Lamu to Addis Ababa and Juba in Southern Sudan.

Transport corridor

A fibre optic infrastructure to link the entire corridor will also be laid and international airports constructed in Lamu, Isiolo and Lokichoggio, three important centres along the new transport corridor.

Isiolo, Garissa and Lokichoggio will be made resort cities.

The government has already promised to push through a Bill in parliament this session on the second transport corridor.

The firm to carry out feasibility studies for the second transport corridor will be identified by mid next month, ministry of transport officials said.

The government has already set aside Sh3 billion for this exercise that is expected to last a year, according to a Ministry of transport official, Mr Elijah Nduati.

The entire project is estimated to cost about US $ 16 billion but the actual cost will only be known when the feasibility studies are complete.

It will be financed through private public partnership and several investors had already expressed interest to finance the project on Build Operate Transfer, Mr Mutule said.