By Ronald Owili
The Lamu Port South Sudan Ethiopia Transport Corridor Development Authority has received a grant amounting to 193.7 million shillings from the New Partnership for Africa’s Development Infrastructure Project Preparation Facility that will be crucial in developing the remaining 29 berths in the LAPSSET project.
The funds will be used to procure transaction advisory services and related technical assistance which will make the project attractive to investors.
The government is currently developing the first three berths at a cost of 48 billion shillings, of which the first berth will be commissioned by mid-2018.
To fully realize the development of the Lamu Port South Sudan Ethiopia Transport corridor, LAPSSET, 2 trillion shillings is needed, it is a budget the exchequer cannot meet as we speak.
Since the ground breaking five years ago, the government has been luring the private sector to invest in the project but the efforts have not borne fruits.
According to LAPSSET Corridor Development Authority, the lack of a transaction advisor and technical expertise has made the project unattractive to investors thus the reason for slow implementation.
The African Development Bank through the New Partnership for Africa’s Development Infrastructure Project Preparation Facility, NEPAD, has channeled a grant amounting to Ksh 193.7 Million to procure a transaction advisor to develop a Transaction Plan which will map-out all the key factors pertaining to project financing options, define the feasible transaction structure, project financing arrangement and scope as well as the project risks, among others.
In the short term plan, Ksh 68.9 billion will be spent on dredging and reclamation, construction of Berths and Yards, construction of revetment, causeway and roads; construction of buildings and utilities; procurement of equipment and tug boats.
The authority says Lamu Port has an economic internal rate of return (EIRR) for the Long-term Development Plan of 23.4% with opportunity cost of 12%.
The port is expected to handle 13.5 million tonnes of dry cargo in 2020 and 23.9 million by 2030.
Expansion of the Suez Canal to handle 97 ships a day up from the current 50 is also set to make Lamu the only transshipment port in Eastern Africa, rivaling the Durban Port.