Door opens for Western companies in Lamu project

Firms from Western countries have won a key opening in their bid to be considered for the construction of seven projects related to the second transport corridor linking the Indian Ocean town of Lamu to Ethiopia and South Sudan.

Kenya had signed a contract with China last year that would have seen the projects built solely by Chinese companies. A Japanese consultant hired to evaluate the viability of the projects, however, has now recommended that the projects be exposed to competitive bidding to attract funding.

“International bidding is recommended by the World Bank and will be welcomed by other major financiers,” said Isamu Koiken of the Japanese Port Consultants that completed the assessment last month.

The consultant argued that broadly accepted criteria for awarding the contracts would help the projects attract financing more easily, effectively opening the door for contractors from other parts of the world.

The feasibility study of the Lamu Port will be introduced to international investors in September when Kenya hosts a regional infrastructure conference, President Mwai Kibaki announced.

The conference will, among others, discuss how the bulk of the financing will be raised. President Kibaki also directed the Minister for Finance to mobilise resources and to set aside funds to kick start the construction of the first of the three berths.

He also ordered the Head of Public Service and Secretary to the Cabinet to coordinate and ensure the project starts immediately. “In this connection, ground breaking for the construction of the first berth in Lamu should be arranged soonest possible,” President Kibaki said.

He said the first berth that will allow the first ship to call on the Lamu Port should be ready by mid next year.

The Head of State was speaking at Kenyatta International Conference Centre during the Government forum on completion of the planning stage of the Lamu Port—Southern Sudan—Ethiopia transport corridor project.

When President Kibaki visited China in May last year, he held discussions with his host President Hu Jintao on China’s role in the construction of the port among other issues. China then granted Kenya Sh1.2 million to finance the feasibility studies of the port.

These developments alarmed Western companies and governments who feared that they will be locked-out of the $22 (Sh200) billion project by China, which has taken a lion share of construction projects in sub-Sahara Africa.

Cancelled tender

After meeting the Chinese President, the presidential press unit announced that the two leaders “had agreed that appropriate modalities on financing arrangements be made to avoid any financial gaps.”

China involvement in the Lamu Port generated further attention when Kenya cancelled the tender to build three berths at the Manda Bay in Lamu.

The berths were meant to facilitate offloading of the construction materials meant to build the port, days before Chinese deputy premier, Vice Premier Wang Qishan, visited Kenya in mid March.

Lamu Port will become the shorter, and most economically viable route to the sea for the land locked South Sudan and Ethiopia. It includes seven projects whose tenders will be issued separately.

The projects are the Lamu Port at Manda Bay, the railway line with branches to Ethiopia and South Sudan and airports at Isiolo, Lamu and Lake Turkana. A highway from Lamu through Isiolo as the junction to Southern Sudan and Ethiopia; resort cities at Lamu, Isiolo and Lake Turkana; an oil refinery at Lamu and oil pipeline from Lamu through Isiolo, branching into Addis Ababa and Juba are other facets.

Landlocked South Sudan has accused Sudan of waging economic war by charging $22.8 per barrel of oil transported through a pipeline to the Mediterranean. President Kibaki said several countries had expressed interest in the construction of the infrastructure project that is among the largest in Africa to be undertaken simultaneously.