Infrastructure

Introduction

The government of Kenya is moving steadily toward economic development over the next couple of decades. Vision 2030 is a forward looking plan to increase the country’s GDP.

Infrastructure is one of the major areas slated for improvement under the Vision. The development plans include significant improvements to roads, railways, seaports, airports, water, sanitation and telecommunications. Kenya is focusing on these in the hope of attracting, accelerating and retaining investors who often complain its dilapidated facilities increase the cost of doing business, rendering Kenya’s products uncompetitive in the global market.
Improved transportation, more reliable shipping methods and a dependable telecommunications network will ensure the success of Kenya’s economic growth plan and reduce risk significantly for investors. The proposed plan is estimated to cost $22 billion.

Lamu Port

The new Lamu port will serve Kenya, the East African Community, Southern Sudan, Ethiopia, the Central Africa Republic, DR Congo, Congo-Brazzaville and Chad. Its importance stems from the port’s ability to handle super post-Panamax vessels because of its deep natural channel — 18 meters in depth. The new Lamu port will be the largest on the continent, serving as a trans-African port. Construction will begin next year, and the entire project will take five years.

The port project, estimated to cost $3.5 billion, will also serve as a trade corridor from Lamu to Juba in Southern Sudan after a standard gauge rail-track is constructed.

The regions to be served by the port will be connected by a standard railway gauge that will run from Lamu with a capacity to handle trains moving at 160 kph when the project is finally completed in 2015. The new railway network will connect the corridor from Lamu to Southern Sudan, Uganda, DR Congo, Central African Republic, Cameroon and Chad. The proposed railway line has already been incorporated in the East Africa Railway Master Plan.

Kenya- Sudan- Ethiopia Second Transport Corridor Project

Kenya’s plans to link the new port at Lamu by rail to Juba provides the shortest distance to the sea for Southern Sudan. An important objective is to export oil from Sudan. The land and rail corridor can provide an alternative route for southern Sudan oil which now transported by a pipeline to Port Sudan in the north eastern part of the country.

Construction of the second transport corridor connecting the planned Lamu port to Southern Sudan and Ethiopia will provide an opportunity to open up the remote and dry Northern parts of Kenya. The rail and road link from Lamu to Addis Ababa in Ethiopia and another to Juba in Southern Sudan will pass through the northern parts of the country, which is resource rich but unexploited.

From Lamu, the corridor will pass through Hola, Bura to Garissa. Hola and Bura are agriculturally rich with potential for rice and cotton production. The government has already launched a Sh2 billion irrigation project to boost food production in Hola.

There are plenty of deposits of cement around Wajir and titanium in the west of Lamu. Another route from Garissa will head to Mwingi and Matuu where there are rich deposits of coal and iron ore. The channel will provide easy access to the mines for shipment through Lamu port.

The third branch from Garissa will proceed to Isiolo, which will also be made a resort city and a free economic zone. Isiolo will be an intersection point for three corridor routes. The first route will proceed to Moyale at the Kenya- Ethiopian border. Ethiopia is already developing the route having completed a feasibility study on the railway line connecting Addis Ababa to Moyale.

The second route from Isiolo will proceed to Nairobi where the new corridor will be linked to the existing Northern Corridor and a final route will proceed to Lokichoggio at the Kenya- Southern Sudan border. Lamu and Mombasa will be connected by a railway line and the two ports will compliment each other. Mombasa port is currently serving Uganda, Rwanda, Burundi and the DRC only.

The government of Southern Sudan will construct its part of the corridor link to the Kenya border near Lokichoggio.

Ethiopia

In line with its commitment to support integrated infrastructure development in the Regional Member Countries, the African Development Bank Group recently approved a $326 million loan to finance the second phase of the Mombasa-Nairobi-Addis Ababa Road Corridor Project. It involves the construction and tarring of 438 km road sections including 245 km Merille River-Marsabit-Turbi road section in Kenya and 193 km Ageremariam-Yabelo-Mega road section in Ethiopia, the construction of roadside socio-economic infrastructure, and the construction of a One-Stop-Border-Post.

The project will benefit trade in Kenya and Ethiopia by:

  • Improving transportation between Kenya and Ethiopia for the benefit of both countries and the region.
  • Reducing transport and shipping costs between Kenya and Ethiopia
  • Reduce transit time for imports and exports
  • Increasing the volume of Ethiopian goods transiting through the Mombasa Port in Kenya.
  • Promoting trade and regional integration and increasing intra-regional trade between Ethiopia and Kenya as well as the Eastern and Horn of Africa regions.

Modernization of the EAC Railways

The existing EAC railways will be modernized into a high-speed railway line to ease the burden from the roads and increase the speed of movement of bulk cargo into and outside the region. This will involve:

  • Overhauling the current Mombasa-Busia-Torot-Kampala line
  • Extending the modern line to Kigali and Kisangani and from port of Dar-es-Salaam through Bujumbura to Kisangani with a link to Kigali.

The rail system will:

  • Reduce inter-regional freight transport costs from nearly 45% to 15%
  • Be of a high capacity and able to sustain trains hauling a minimum of 4,000 tons traveling at an average speed of 120km/h
  • Meet increased transport demands that are projected to be in excess of 30 million tons by the year 2030
  • Be completed in phases with the Mombasa-Nairobi section of the line expected to be completed by 2013 while the Nairobi-Kisumu- Malaba one is projected to end by 2016.

Airports and resorts

International airports will be constructed in Lamu, Isiolo and Lokichoggio, three important centers along the new transport corridor. The three centers will also be made resort cities.

Oil Refinery

An oil refinery with a capacity to process 120,000 barrels of oil per day will be constructed at the new port of Lamu to meet the growing demand for oil products in the region. It will largely refine crude oil from Southern Sudan and other parts of the world to serve the larger East African market.

Power Generation

For Kenya to be competitive in the region and beyond, the availability of reliable, adequate and affordable power, among other key infrastructure components, is imperative.

Kenyan electricity producer, Kengen, opened its 15 billion shilling Public Infrastructure Bond Offer to investors in September 2009. KenGen received subscriptions worth 335 million for its bond offer, meaning the issue was oversubscribed by at least 68%.

Funds from the bond will be invested in diverse sources of energy. About 80% of the capital would be used in generation of thermal power while the remainder would go to upgrade power plants at the Tana River Delta. The additional funds will also enable the implementation of renewable power projects like geothermal.