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      • Lamu abuzz with construction as South Sudan seeks new pipeline

Lamu abuzz with construction as South Sudan seeks new pipeline

A high level delegation from South Sudan has been in Kenya through the
week to initiate negotiations with over rights of passage for the
2,000 kilometre crude oil pipeline the country has decided to build to
connect its oil fields to the Kenyan coastal town of Lamu.
 
Initially, Juba said it would be building the pipeline on its own at
an estimated cost of $3 billion, with Kenya’s role limited to granting
right of passage. But it appears that as the negotiations progressed
last week, Juba realised that the scope of co-operation with Kenya on
the project will have to be much broader to leverage the latter’s
experience in executing large pipeline projects.
 
The climax of these preparations will be a groundbreaking ceremony to
be conducted by President Mwai Kibaki on March 2 that will mark the
start of the construction of the Lamu port. Ethiopian head of state
Meles Zenawi and President of South Sudan Salva Kiir are among the
dignitaries expected to attend the ceremony.
 
Last week, the joint implementation committee leading the negotiations
expanded the terms of engagement. The parties will be negotiating
terms and the role that Kenya can play in project execution support
and management of the pipeline when it is fully operational. The joint
committee is also negotiating issues such as immigration, transit
fees, and provision of security for the pipeline
 
Last week, the negotiating party agreed to appoint a transaction
adviser to advise on what are turning out to be complex negotiations.
 
With the government in Juba having decided that it will no longer
export crude oil through North Sudan, the need for an alternative
route to the sea is now more urgent than it has ever been for South
Sudan.
 
The South Sudanese have said they want a pipeline up and running
within 18 months.
 
Whether this is possible is debateable. But it is noteworthy that
China Engineering Pipeline Corporation (CPPEC), the Chinese contractor
working with the state-owned Kenya Pipeline Company, only recently
completed building a 400-kilometre pipeline between Nairobi and
Eldoret in a record 18 months.
 
Insiders have told The EastAfrican that due to the urgency with which
Juba wants a pipeline, the plan is to have multiple contractors
building different sections of the 2,000-kilometre pipeline.
 
For Kenya, the souring of relations between Juba and Khartoum offers
not only a great opportunity to boost its geostrategic significance as
the hub of economic activity in the region, but also an opportunity to
achieve its dream of acquiring a second transport and economic
corridor. Deepening economic relations with South Sudan and Ethiopia
will counterweigh the heavy dependence that Kenya currently has on
Uganda and Tanzania in the region.
 
Right now, Kenya only has one transport and economic corridor, the
Northern Corridor, starting from the port of Mombasa to Malaba on the
border with Uganda and onwards to Central Africa. A second corridor is
critical for Nairobi as Kenya wants to access Ethiopia and South Sudan
through northern and eastern parts of the country from the new port of
Lamu.
 
Kenya’s ultimate aim is to extend the transport corridor to Kigali all
the way to Douala in Cameroon. This will spawn a deeply
inter-connected economic zone straddling the Nile Basin countries that
will not only overshadow the ambitions of the East African Community,
but whose future will be shaped by regional trade in oil, gas and
electricity and the need to access the Indian Ocean.
 
Indeed, the battle over pipelines and access to the sea between
Khartoum and Juba has broken out just when Kenya is in the middle of
implementing its second corridor project.
 
A major project estimated to cost $15 billion, it has multiple parts
including the Lamu port itself, and a railway line and fibre optic
cable running from Lamu to South Sudan and Ethiopia through Isiolo.
 
The scope of the second corridor project includes airports at Isiolo,
Lamu and Turkana, a highway, an oil refinery at Lamu and resort
cities. But until the South Sudanese came up the other day, the only
project that was actually being implemented was the Lamu port.
 
Indeed, the scope of the second corridor project had been reduced to
the building of three berths to handle bulk cargo, general cargo and a
container terminal. The pressure by the South Sudanese was bound to
alter the equation, speeding up the construction pace of the port.
 
Repairs to road connections to places like Malindi, Witu and Garsen
are going on at a scale and pace never witnessed before. But the most
dramatic is the work currently going on the port area itself.
 
The whole port area is a massive construction site, with contractors
clearing bush and building road connections to the port area. The
construction of water and sanitation services and installation of
electric equipment has already started.
 
The contractors building the port office headquarters, a port police
station, and car parks moved to the site late week.
 
Controversies
 
Implementation of the Lamu project has not been without controversy. A
disagreement between the Ministry of Finance and the Treasury over the
cost of the feasibility study almost scuttled the whole project.
Well-connected individuals connived with land officials to allocate
themselves land on the port area, with the intention of selling it to
the government later at a huge profit. It has emerged that some of the
landowners had even charged the property to commercial banks for huge
advances.
 
The matter was only settled two months ago when the Cabinet resolved
that all titles in the proposed site of the port be cancelled by
decree and the land compulsorily acquired. What is clear is that the
entry of the South Sudanese into the fray has now altered the stakes.
Even with delays, the proposed Lamu port is set to be the region’s
largest oil exporting port.
 

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