Uhuru decries Lapsset project delay

President Uhuru Kenyatta’s recent visit to the Lamu port and the adjacent infrastructure projects that form the Lamu Port-South Sudan-Ethiopia Transport (Lapsset) corridor exposed the project’s slow pace, putting its viability into question.

President Kenyatta was unimpressed by the progress of the infrastructure outside the port, especially the roads meant to link it with the hinterland.

His concerns came even as the port, whose first berth is now complete and ready for business, continues to attract interest from regional states.

The Ethiopian ambassador to Kenya, Tikea Meles, Uganda’s consul-general in Mombasa, Katureebe Tayebwa, and South Sudan’s Gen Gregory Vasili, who is also the governor of Gogrial State, have recently inspected the new port and valuated it.. Last month, it hosted the US ambassador to Kenya, Kyle McCarter, and the UK High Commissioner Jane Marriot.

President Kenyatta expressed his displeasure with the contractors building the Malindi-Lamu road who, in their defence, blamed insecurity for the slow progress of the construction.

AMBITIOUS PLAN

The President is however said to have dismissed the explanation, pointing out the permanent presence of the military in the area.

“No workers were on site on the day of the President’s visit,” a source told the Saturday Nation. “The President wasn’t happy with the progress of the Hindi road.”

Launched in 2012, the Sh2.4 trillion Lapsset project comprises link roads from Kenya to Ethiopia, a pipeline to Kenya’s northern region, an international airport in Isiolo Town and a seaport in Lamu. At least Sh31 billion was allocated for the task.

In the original plan, the project comprised a 32-berth port, transport hubs for rail, a highway and international airports in Lamu, Isiolo and Lodwar, an oil pipeline from South Sudan, Uganda and Ethiopia to Lamu, an oil refinery and three resort cities in Isiolo, Lamu and Turkana.

Seven years on, only the Isiolo airport and the highway to Moyale on the Kenyan side are complete.

The first berth has been completed and the inaugural mother ship with about 10,000, 20-foot equivalent units is expected to dock there soon.

BOOSTING BUSINESS

But the Sh48 billion dockside projects are months behind schedule due to funding challenges.

Kenya expects the port to serve South Sudan, Congo-Brazzaville, the Democratic Republic of Congo and other East African countries, even though the requisite infrastructure to allow this to happen is far from complete.

The Garissa-Isiolo road, for instance, is yet to start while the Lamu-Garissa road remains in limbo after the contractor failed to meet the January 2019 deadline in assembling equipment for the job.

The Sh10.8 billion Lamu-Garsen road expected to be completed in December, is also behind schedule, with construction at 30 per cent.

All this means that the haulage of any goods landing at the port this year will not be possible.

Meanwhile, the Kenya Ports Authority (KPA) has seconded dozens of workers to the Lamu port, with promotional discounts for shippers, including 30-day free storage for transshipments and transit cargo, and a similar two-week offer for domestic cargo.

The KPA will also offer a 40 per cent discount for the cost of discharging cargo from the ships that dock at the port, and the cargo handling fees.

VIABILITY

Shippers, aware of the poor road infrastructure around the Lamu port, have already raised concerns, noting that there is a need to invest more on infrastructure to make the port more attractive to investors.

“The government needs to work on the inland operations cost to make the Lamu port more attractive to shippers and other investors,” said Shippers Council of East Africa chief executive officer Gilbert Lagat.

“Most of shippers consider end-to-end cost before venturing into any business, and hence the need to speed up the other infrastructure to make movement of goods cheaper.”

With the delays in construction of the roads connecting the port to the north, Kenya is banking on transshipments to sustain the port.

The latest data from KPA shows that transshipment traffic to the Mombasa port doubled to 1.3 million tonnes in the first seven months of this year, from 624,000 tonnes over the same period in 2018, indicating the business opportunity for the Lamu port.

But the recent changes in the Horn of Africa have cast doubts on the viability of this project, given that Ethiopia, the project’s biggest potential client, has invested billions of dollars in ports in Djibouti and Somaliland.

LOGISTICS

KPA data shows that in the seven months to July this year, Ethiopia did not use the Mombasa port, with transit goods to Ethiopia dropping to zero from 1,000 tonnes.

Uganda, South Sudan and DR Congo remained the main users of the port.

Ethiopia’s exit could be attributed to its investment in the Djibouti and Somaliland ports, along one of the world’s most strategic waterways.

But Lapsset Corridor Development Authority chief executive officer Sylvester Kasuku is optimistic.

“The Lamu port is strategically located to serve southern Ethiopia, which has about 50 million people, even if the country has access to Eritrean and Djibouti ports,” Mr Kasuku said.

To convince Addis that the Lamu port is a profitable project, Kenya was expected to set aside land to set up a logistics facility in Lamu.

This is yet to be done, with sources telling the Saturday Nation that discussions between the two parties are still underway.

“We are at the centre of this project and, being landlocked, we stand to be the biggest beneficiaries of this port,” Mr Meles said during his recent visit.

CRUDE OIL

South Sudan’s Vasili, a key ally of President Salva Kiir, said the port is also strategic to his country.

“Once the road network to the northern region is done, it will shorten the distance our goods travel,” he said.

Kenya is also behind schedule in building the Lokichar-Lamu crude oil pipeline, with the project’s implementation expected to start by 2022.

In April last year, Kenya picked British company Wood Group Plc to do the front-end engineering design study for the Sh200 billion oil pipeline to pump crude from the fields in Lokichar in Turkana County to Lamu.

Petroleum and Mining Principal Secretary Andrew Kamau at the time said the design work would take eight months.

The Saturday Nation understands that the British firm completed the design work and handed it over to the Ministry of Energy.

It is also understood that the environmental and social impact assessment of the pipeline project has already been conducted, with sources saying the construction of the 824-kilometre pipeline could even start next year.

The surveying of the Lokichar-Lamu pipeline route has reportedly begun with the government targeting first commercial crude exports in 2023.

Last month, the country started crude exports under the Early Oil Pilot Scheme, with full-scale production projected in the next three years.