Construction of Dongo Kundu SEZ to proceed after a long delay
President William Ruto (left) and Taifa Gas Group Chairman Rostam Aziz unveil a plaque during the ground-breaking ceremony for the construction of the 30, 000-metric tonne plant at the Dongo Kundu Special Economic Zone in Likoni, Mombasa County, on February 24, 2023.
What you need to know:
- "We have managed to reach an agreement to meet President William Ruto's wish for the project to start soon.
- We will pay the affected people in the next two months,” PS, Investment, Abubakar Hassan.
Five months after President William Ruto suspended the Sh1.4 billion compensations for the Project Affected Persons (PAPs) list to pave the way for verification, the government will resume payments to the affected people in two months.
More than 1,648 residents of Dongo Kundu, Mwangala, Mrongondoni, Kaya Mtongwe, Mbuta and Siji villages will be resettled on 357 acres of land to pave the way for the project.
The project is being implemented by the Kenya Ports Authority (KPA) and funded by the Japan International Cooperation Agency (JICA), which developed the master plan for the project.
The Ministry of Investment Promotion has stepped up efforts to operationalise the 3,000-acre Dongo Kundu Special Economic Zone in Mombasa.
The Principal Secretary for Investment, Abubakar Hassan, said they had successfully resolved the land compensation dispute involving Project Affected Persons (PAPs) during a multi-agency meeting to review the SEZ's readiness to host investors.
"We have managed to reach an agreement to meet President William Ruto's wish for the project to start soon. We will pay the affected people in the next two months and open the tender for more people to apply," said Mr Hassan.
The meeting at the Kenya Ports Authority (KPA) in Mombasa brought together the managing directors of KPA, the Special Economic Zone Authority (SEZA), the National Land Commission (NLC) and officials from the Japan International Cooperation Agency (JICA).
Issues over compensation have deterred investors, with only three investors allocated land, while more than 16 investors have moved into the Naivasha SEZ.
The government's offer of lower electricity tariffs has attracted investors, with six top investors allocating about $131 (Sh20.67 billion) to invest in the area.
Five companies have already moved into the area to set up their industries, with a Sh5 kilowatt offer attracting more investors.
The PS said the Dongo Kundu SEZ will have a power incentive of Sh10 during peak hours and Sh7.5 off-peak, similar to the Naivasha SEZ.
According to KPA Managing Director Captain William Ruto, they have received many applications from investors eager to set up businesses in the SEZ, and he encourages more investors to join.
"The government's directive is for the zone to be operational. Although we are a bit behind, we have addressed all the issues that are hindering progress," said Captain Ruto.
The Dongo Kundu SEZ is being developed on 3,000 acres of land and will include a free port, industrial parks, free trade zones, logistics and warehousing, energy project areas, tourism and MICE, among others.
Last month, Japan agreed to pump Sh260 billion into the project's infrastructure ecosystem and the Mombasa Gateway Bridge.
This is part of the Sh350 billion financial agreements signed during President Ruto's visit to Japan earlier this month.
According to the financing proposal, the entire project will be financed under a Jica loan scheme structured as a Sh6 billion grant and a Sh50 billion concessional loan payable over 30 years.
The project is part of Kenya's industrialisation plan, boosted by the revised draft SEZ Regulations (2019), which offer incentives to companies operating in the zone.
Incentives under the new regulations include an exemption from value-added tax (VAT), a reduction in corporate tax from 30 per cent to 10 per cent for the first 10 years and 15 per cent for the next 10 years, tax and duty exemptions, and county-level advertising and licensing fees.
