The Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor Development Authority has received a grant amounting to 193.7 million shillings (about 1.88 million US dollars) from the New Partnership for Africa's Development (NEPAD) Infrastructure Project Preparation Facility which will be crucial in developing the remaining 29 berths of Lamu port under 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. NEPAD is an economic development programME of the African Union (au).
The Kenyan government is developing the first three berths of the port at a cost of 48 billion shillings, with the first berth expected to be commissioned by mid-2018.
In order to fully realize the development of the LAPSSET project, 2.0 trillion shillings would be needed. Since the ground-breaking for the project five years ago, the government has been luring the private sector to invest in the project but the efforts have not borne fruit.
According to the LAPSSET Corridor Development Authority, the lack of a transaction adviser and technical expertise has made the project unattractive to investors resulting in slow implementation.
The African Development Bank (AfDB), through the NEPAD Infrastructure Project Preparation Facility, has channeled a grant amounting to 193.7 million shillings to procure a transaction adviser 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, 68.9 billion shillings 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 per cent with opportunity cost of 12 per cent. 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 trans-shipment port in East Africa, rivaling Durban port in South Africa.
Source: NAM NEWS NETWORK