East Africa: A New Oil Frontier Is Born

East Africa: A New Oil Frontier Is Born

The Lamu Port-Southern Sudan-Ethiopia Transport Corridor (Lapsset) is probably the most ambitious transport project in the modern history of the continent.

When completed it is expected to create a busy and thriving economic corridor from the Indian Ocean on the east to Douala on the Atlantic coast in the west and to transform the economies of several African countries.

Lapsset is also a flagship project of the Kenya Vision 2030 programme, which includes a comprehensive upgrading of roads, rail, ports and airports as part of a long needed transport sector overhaul.

Work on some elements of the project is already well under way. President Mwai Kibaki has unveiled the artist’s impression of Lapsset: the 193 km Moyale-Addis Ababa road which is to be linked to the 136 km Isiolo-Merille road is nearing completion and the  Marsabit-Turbi road is expected to be completed in April 2014.

The project will mianly consist of a modern port at Lamu, an oil refinery, standard gauge railway line to Juba in Southern Sudan with a branch line to Ethiopia, two oil pipelines (one for crude, one for refined products) linking Lamu with the oil fields of Southern Sudan, a superhighway connecting to Ethiopia and Sudan, an international airport and several resort cities and towns within Kenya. The railway will later connect Central African Republic and Cameroon. When complete, the Lamu port will be the largest port on the African continent. The Kenyan government has indicated that it will commit 16% of the project’s $23bn budget between 2013 and 2018.

Alhough Lapsset seems to be a novel idea, it was first conceptualised 38 years ago in 1972 by the then Kenyan Minister for Transport and Communications, the late Ronald Ngala. Ngala commissioned a French engineering firm, Renardet SA (now based in Switzerland) to undertake a viability study. Owing to the costs involved then, the project was put on ice until it was revived in 2010.

The envisaged standard gauge railway will start from Lamu to Sudan onwards to Central Africa Republic, and finally Cameroon. Additional lines will go to Uganda, Rwanda, DRC and Congo Brazzaville, with a branch line into Ethiopia. In other words, Kenya is looking at building the largest and most ambitious modern railway infrastructure in sub-Saharan Africa.

The financing of the project makes an interesting story. In 2008, the Qatar government had expressed its willingness to finance the entire project in exchange for a lease of 100,000 acres in the fertile Tana River delta so as to grow food for its people. This generated heated debate within the country.

When Qatar pulled out, the Chinese took pole position. There have been several meetings involving Kenya President Mwai Kibaki and PM Raila Odinga and several Chinese officials including the Foreign Minister Yang Jiechi and President Hu Jintao. The outcome has not yet been made public but in April 2010, Japan Port Consultants was awarded the tender for the feasibility study.

The Japanese feasibility study is now complete and was unveiled by President Kibaki in the middle of this year. An inter-ministerial committee has been visiting capitals around the world looking for partners. Several Chinese firms are said to have expressed interest in the project.

The Chinese are also heavily involved in road projects that will feed into Lapsset. The Nairobi-Thika highway is being re-engineered at a total cost of $375m to provide a vital link on the Trans-African Highway and the Great North Road connecting Cairo and  Cape Town, and similarly linking East Africa and West Africa.

The highway also serves as a gateway to Northern Kenya and the neighbouring countries of Ethiopia and Somalia, and is expected to feed into the major roads that will form part of the $23bn Lapsset corridor. The construction of the Thika superhighway began in January 2009 and is being undertaken by three Chinese construction giants, China Wu Yi, Shengli and Sino Hydro.

Construction of the eastern, western, southern and northern bypasses in Nairobi, which are aimed at making Kenya the region’s business hub, are being handled by the China Road and Bridge Company.

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Written by African Business Magazine

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