Kenya sets up agency for $29bn South Sudan, Ethiopia project

From left, South Sudan President Salva Kiir, Kenya President Mwai Kibaki and then Ethiopian Prime Minister Meles Zenawi during commissioning of the multi-billion Lamu Port project on March 2, 2012. FILE | NATION MEDIA GROUP 

Kenya has set up an autonomous agency to manage the implementation of a mega infrastructure project targeted at improving trade with its neighbours South Sudan and Ethiopia.

President Mwai Kibaki said the Lamu Port Southern Sudan Ethiopia Transport Corridor (Lapsset) Development Authority will manage the Ksh2.5 trillion ($29.24 billion at current rates) project on behalf of the government.

“The headquarters of the authority shall be in Nairobi with field offices in Lamu, Isiolo, Lokichoggio, Marsabit and Moyale,” the outgoing President said in a special gazette notice.

It will be run by a director-general under an 11-member board that includes five State officials, five private sector representatives and a chairman appointed by the President.

The project entails construction of a new sea port at Manda as well as standard gauge railway lines from Lamu to South Sudan with branches to Nairobi and Ethiopia from a hub in Isiolo, Kenya.

It will entail the construction of a highway from Lamu to Isiolo with an extension to Nadapal/Nakodok in South Sudan and another link to Addis Ababa through Moyale.

Lapsset further targets the construction of a crude oil pipeline from Lamu to South Sudan and Addis Ababa, international airports at Isiolo, Lamu and Lake Turkana and resort cities at Lamu, Isiolo and Lake Turkana, merchant oil refinery at Lamu among others.

Cutting dependence

As well as cutting over-reliance on the Mombasa port, the project is aimed at deepening trade in east Africa and opening up northern Kenya, a vast area whose economy lags the rest of the country.

The new agency is expected to push for public private partnerships (PPPs) to help with the implementation.

Besides the Lamu-Juba corridor, Kenya and South Sudan have also kicked-off a fresh bid to boost trade between them with the planned construction of a Sh87.5 billion ($1.02bn) highway to link the two countries.

Kenya’s Roads minister Franklin Bett and his counterpart from South Sudan Gier Aluong last month said the two nations agreed to upgrade the 960km Eldoret-Juba road to international highway standards and construct a one-stop-border post at Nadapal as well we as several road amenities.

“The two countries view the road as being critical in promoting cross-border trade and making it easy for landlocked South Sudan to transport goods destined for the country through the port of Mombasa,” they said in a statement.

Deplorable state

The Eldoret-Juba road is in a deplorable state partly due to frequent usage by humanitarian agencies during relief operations from port of Mombasa to South Sudan.

Experts say the road was not designed to carry heavy traffic while lack of regular maintenance has also contributed to its deterioration especially between Marich Pass and Lodwar. The new highway will be upgraded and built to bitumen standards.

Talks on funding for the project are under way with some development partners already pledging support.

“The two governments have agreed to jointly approach development partners to provide concessionary finance for parts of the projects," the minister said.

‘‘The World Bank has agreed to play a co-ordinating and facilitating role in seeking syndicated financing for the project estimated to cost $1 billion,” the ministers said.

A feasibility study and design of the South Sudan side of the road project is complete while Kenya’s is scheduled for the third quarter of 2012/13 fiscal year, they said.

South Sudan is opening up its economy to trade with partners in eastern Africa in a bid to consolidate its growth after it successfully seceded from Sudan in July 2011.

Can Kiir deliver on his promise of peace and stability in South Sudan?

Read Story:Can Kiir deliver on his promise of peace and stability in South Sudan?