April 11, 2013 / 3:46 PM / 6 years ago

Kenya says Chinese firm wins first tender for Lamu port project

* To build first three berths at the port

* Port to have 32 berths when complete in 2030

By Drazen Jorgic

NAIROBI, April 11 (Reuters) - A Chinese company has won the tender to build the first three berths at Kenya’s new mega port in Lamu, a senior Kenyan official said on Thursday, offering a glimpse of how east Africa’s biggest infrastructure project will be put together.

Kenyan government is spear heading a $25.5 billion project to link landlocked South Sudan and Ethiopia to the Indian Ocean port of Lamu by constructing a major highway, a railway and an oil pipeline, which would take many years.

Kenya says the Lamu Port-South Sudan-Ethiopia (LAPSSET) corridor project will add 2 to 3 percent to Kenya’s economic growth but critics call it a vanity project, arguing the money would be better spent upgrading Kenya’s existing infrastructure.

Silvester Kasuku, chief executive of LAPSSET, said a consortium of companies led by China Communications Construction Company has won a 41 billion shillings ($484 million) contract to build the first three berths at Lamu port.

“We called for contractors and the best was a consortium headed by China Communications,” Kasuku told Reuters, pointing out that Lamu port will have 32 berths when the whole project is complete in 2030.

“We are doing the seed investment by constructing the first three berths just to break the ground and put government commitment and investment and provide incentives for private sector investors to come on board.”

Through its flagship international arm, China Road and Bridge Corporation (CRBC), China Communications in 2011 signed a $66.7 million deal to expand the number of berths at Mombasa port, east Africa’s largest port.

China Communications last year also signed a $2.66 billion deal to update Kenya’s railways, announcing plans to construct a stand-gauged 479 kilometres line between Mombasa to Nairobi.


The $5.3 billion port plan has been politically controversial in Lamu.

Environmentalists say the multi-billion port at Manda Bay, which juts out into the Indian Ocean towards the islands of Lamu, Manda and Pate, will destroy delicate marine life and choke coral reefs and mangroves.

The Kenyan government says it has been sensitive to environmental concerns, though Kasuku concedes no large-scale infrastructure project can leave natural surroundings untouched.

The Kenyan government is now seeking foreign governments and private investors to help fund the transport corridor.

Kasuku said the Development Bank of Southern Africa (DBSA) has expressed interest in contributing as much as $1.5 billion towards the LAPSSET project.

“That’s a huge chunk but the terms must also be favourable,” Kasuku said, pointing out that talks are at a preliminary stage.

DBSA spokesman Jacky Mashapu said the bank was interested in the project and “keen to be lead arranger.”

Kasuku said it will take 3 years to complete the first three berths in Lamu port and during this period the Kenyan government will be constructing a business plan for how the private sector can be involved, with private public partnerships (PPPs) and joint ventures touted as possible mechanisms.

$1 = 84.6250 Kenyan shillings Editing by George Obulutsa and James Jukwey

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