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5Feb/090

Lamu port will put Kenya on maritime pedestal

The proposed port development at Lamu is a big project by any standards. It will include a railway network connecting the Southern Sudan, Ethiopia, Central Africa Republic and possibly Cameroon and Chad, an oil pipeline from Southern Sudan to the port, an international airport and a free trade zone.

While the development of Kenya’s second port at Lamu is of great interest to all Kenyans, there are local concerns and sensitivities, which must be acknowledged, respected and, where necessary, addressed. Ordinarily, a project of such magnitude and expected economic benefits should be received with joy by everyone but this has not been the case. Granted, projects of this size have had hiccups when getting off the ground, but what is happening  at Lamu goes for unnecessary controversy and confusion.

At the moment, there are many port projects routinely being implemented worldwide without fuss.

It was in 1972 when the first study of Lamu as Kenya’s possible second port was conducted. RENADET-SAUTI, a French firm of consulting engineers, ran  the study initiated by then Ministry of Transport and Communications with the late Ronald Ngala as minister. Then, the Government was mainly interested in Lamu as a second port for strategic and security reasons.

Among other things, the survey was on a railway line to Nairobi and identified an alignment through Garissa to Nairobi offering a distance of about 510 kilometres from Lamu which by coincidence is about the same distance by rail from Mombasa to Nairobi.  But it was not pursued at the time because it lacked economic justification.

The port of Mombasa handled just a little over two million tonnes and Kenya had a population of about nine million.

Last year, the port handled a total traffic of 16 million tonnes growing at an average of 10 per cent every year and population now stands at about 36 million.

After 36 years, a great deal has happened. Global shipping dynamics and trends in international logistics will place the proposed facility in a different context from that of the 1970s.

The Eastern African countries have embarked on a standard gauge railway master plan sponsored by Kenya and Uganda as a way of modernising their transport infrastructure.

The proposal is meant to replace a total of 5,000 kilometres of the old colonial metre gauge and to add 6,000 kilometres that will link all the hinterland countries with the waterfront facilities in Kenya and Tanzania. These include Dar-es-Salaam, Tanga and a new port proposed at Bagamoyo, north of Dar-es-Salaam.

Under the proposed Lamu port, In Kenya, a railway network planned from the Kenyan waterfront and its hinterland comprises three main lines. There will be a new 1,290 kilometres standard gauge line from Mombasa to Kampala to be extended to Kigali (Rwanda) and Bujumbura (Burundi).

From Kampala, it is planned a 540 kilometre standard gauge railway line to Juba in Southern Sudan through Gulu and Nimule. The meter gauge line from Nakuru to Kisumu will also be replaced by standard gauge.

A new 1,600 kilometre line will run from Lamu to Juba via Archer’s Post, Isiolo and another 1,380-kilometre stretch from Nairobi through Archer’s Post to Addis Ababa, Ethiopia, giving the Kenyan neighbour access to the proposed Lamu port.

The 780-kilometre meter- gauge line from Addis to Djibouti will probably be replaced with standard gauge to provide efficient link to the port which has now been conceded to Dubai Ports World (DPWorld) for modernisation and management.  This will provide Ethiopia with world-class efficient port services at Djibouti.

With reports that a major American railway company has expressed interest to build a new standard gauge railway line from Dar-es-Salaam to Isaka and extend to Kigali, possibly giving Rwanda, an emerging economy within the region, two rail outlets to the Indian Ocean, through Tanzania, and the other through Uganda and Kenya.

The proposed standard gauge master plan for Eastern Africa can be used as a basis for an expanded regional network to cover a bigger hinterland for the regional waterfront. This, however, would require political stability and goodwill, which goal will no mean feat looking at the history opf Europe, awhose countries at one time  fought for 100 years.

More recently, they fought the First World War and the Second World War.

But East Africa should learn a lesson that today the European countries have merged into a thriving economic community of 25 countries with a population of over 450 million served by 15 major ports on the Atlantic and nine on the Medetriarian, all interconnected by a massive railway network with a well regulated seamless cross-border interoperability.

The Eastern and Central African region being considered here is made up of 11 countries with a population of about 300 million. The proposed regional railway network is approximately 15,000 kilometres.

All this will require the fullest development of port facilities on the East African waterfront which in Kenya will mean Lamu and Mombasa and at least two major ports in Tanzania. It is in this context that the proposed Lamu port and indeed other ports in East Africa should be examined.

Changing circumstances have made the development of Lamu imperative. Coming to the fore is the perennial congestion and physical limitations to future development at the port of Mombasa.

Southern Sudan and Ethiopia require an outlet into Kenya for  seaborne trade and Lamu readily offers such an opportunity. All things considered, there is sufficient demand to justify the development of Lamu as a second seaport for Kenya and it is imperative.

Lamu has great potential for development because of its vast deep harbour. Preliminary studies have revealed that Lamu can have a quay length of well over 10 kilometres and at least 18 metres draft alongside.

There is a deep 11-kilometre long channel with an average width of about two kilometres. There is also ample land in Magogoni area for port operations and a Free Trade Zone  (FTZ).

The wide channel will be able to accommodate multiple navigation in and out. The new port will be situated in Manda Bay to the west of Pate Island, one of the islands in the Lamu archipelago.

It will be well away from Lamu town which is a Unesco-protected world heritage site.  The port will be free from the limitations of Mombasa in terms of navigation and operating draft.

Vibrant landbridge

It will, therefore, be able to accommodate giant container ships in use, those being built, or planned.  These are very important strategic considerations for the future development of Lamu port.

The proposed Lamu-Juba-Douala transport corridor has the potential of becoming one of the most vibrant “landbridges” in the world. Its equatorial position places it half way between the Suez Canal and Cape Town while its meridian position places it well between the Western and Eastern hemispheres.

In logistics, a “landbridge” describes a transport corridor through a land mass which connects ocean routes on either side of the land mass, usually by rail, thereby providing a seamless flow of container traffic in a shipping logistics chain.

The transcontinental coast to coast railway lines in the US and Canada have acted as landbridges since the inception of containerisation, while the railway line from St. Petersburg to Vladivostock spanning the former USSR for 8,500 kilometres is the longest of such landbridges.

The shortest landbridge on record is the 317-kilometre Kedem Landbridge between Ashdod in the Gulf of Aqaba, and Eilat on the Mediterranean Sea, which Israel tried to develop by road when the Suez Canal was once closed to Israeli maritime traffic.

Currently Saudi Arabia is reported to be building a railway line from Jeddah to Dammam which may be extended as a landbridge to the Persian Gulf.

According to industry reports, the German Railways are currently negotiating with shipping lines serving the east coast of the US to develop a landbridge service from Hamburg to Chinese ports via Eastern Europe and Central Asia.

This landbridge will be approximately 11,500 kilometres thus surpassing the St. Petersburg Vladivostok Landbridge

The proposed Lamu-Juba-Douala transport corridor is estimated to be about 4,000 kilometres long, compared to the American and Canadian transcontinental lines which are 5,000-6,000 kilometres long or the St. Petersburg Vladivostok line.

It has also been estimated that the Lamu-Juba-Douala corridor if built as a twin railway line would have a potential total throughput capacity of at least 10 million TEUs per year.

This would require that the two ports of Lamu and Douala have capacities to match this landbridge throughput over and above the normal hinterland and transshipment traffic.

All these considerations support the establishment of Lamu as a hub port of mega proportions.  Lamu also occupies an attractive geographical position on the western shore of the Indian Ocean which could be the ideal end of the voyage for the large container vessels coming from Southeast Asia and the Far East.

Economic viability

The idea of a coast to coast railway from the Indian Ocean to the Atlantic is not entirely new to Africa. The insipient landbridge from Lobito in Angola to Dar-es-Salaam has been suggested.

This uses the old Benguela railway to the Zambian copper belt linked to the Chinese built Tanzania Zambia Railway (TAZARA) from Kapiri Mposhi to Kidatu where the TAZARA Cape gauge line is connected via transshipment to the Tanzanian meter -gauge onward to the port of Dar-es-Salaam.

The idea of the Lobito-Dar-es-Salaam landbridge seems to have no geographical or economic viability and is, therefore, likely to remain a dormant concept.

The Lamu-Juba-Douala landbridge is an idea whose time has come. It is a powerful concept which could revolutionise world shipping and logistics arrangements.  It is an idea which could dramatically change the fortunes of the four landbridge countries, namely Kenya, Southern Sudan, Central African Republic (CAR) and Cameroun.

This is a project that will be of vital interest to the international shipping community as well as the major global port operators. The Indian Ocean is crying for another port on the western shore to compete with and even complement Dubai as a major transshipment hub.  Lamu has the logical geographical position and sufficient water and land to answer this challenge.

At this point, there are mega international transport initiatives in progress or being planned. The expansion of the Panama Canal is expected to be completed by 2015.  It has been reported that Argentina and Chile are planning a tunnel through the Andes Mountains to connect their two countries.

The legendary Gotthard Tunnel across the Swiss Alps is scheduled for massive expansion at a very ambitious budget. A 28- kilometre bridge has been proposed across the Gulf of Aden to link Yemen with Africa.

The Lamu Juba Douala transport corridor may appear to be a modest effort compared to some of these initiatives.  Nevertheless, within the context of Africa it is quite an ambitious and novel project that should be embraced without a second thought.

In terms of development, operation and market position Mombasa and Lamu are not necessarily mutually exclusive. Potentially there is more complementarity between the two ports than competition.

Basically, Lamu port is a facility that will serve Southern Sudan, Ethiopia, Central African Republic, Cameroun and even other parts of Sudan and Chad once peace is restored.

On the other hand, Mombasa will continue to serve Kenya, Uganda and the Great Lakes countries.  With a bit of dredging and the development of the Dongo Kundu Complex, Mombasa could readily accommodate container vessels of up to 4,800 TEUs capacity which is the current maximum panamax.

The two ports will thus play a complementary role in making Kenya move towards being a global maritime power.

The Lamu port project is a very unique project.  The proposed port combines three very important functions. First it is a port site with a potentially vast hinterland.

Secondly it is a potential mega hub for transshipment traffic. Thirdly it is a potential landbridge port for a very busy international transport corridor.  All three considerations make Lamu the most important port site on the western shores of the Indian Ocean and possibly the most important in Africa.

It is also the only natural site where Kenya can establish its second port. In comparison, the fabled Jebel Ali container port consists of dredged dock basins sheltered by artificial breakwaters.

Jabel Ali is really only a transshipment port, albeit with its 100-square kilometres legendary value adding Free Trade Zone. Lamu on the other hand will have a much broader spectrum of port functions.

Own and operate

The dynamics of modern shipping have created shipping lines with global reach and also port and container terminal operators with global reach.  Many shipping lines operate in consortia using space in shared vessels.

Likewise consortia have been formed between port operators and shipping lines to develop and operate ports and container terminals on a worldwide scale. Thus, several major shipping lines have formed subsidiaries for owning and/or operating container terminals.

For example, the AP Moller Group which is the parent of the largest container shipping line MAERSK SEALAND has APM Terminals (APMT) as the arm of the group to own and operate container terminals.

China Overseas Shipping Company (COSCO) has Cosco Pacific looking after its container terminal operations.

PSA International of Singapore, Hutchison Port Holdings (HPH) of Hongkong, DPWorld of Dubai and International Container Terminal Services Inc (ICTSI) of Philippines all came up from former port and terminal operators.

The Lamu project is a thoroughly bankable project. It is its own collateral which needs no further collateralisation. Here is an opportunity for Kenya to think bold, think big and think smart.

There can therefore be no need to bring in any unrelated aspect into the project’s implementation process. All that is needed is to follow well known standard road map in implementing such projects.

Ideally the project should be funded through a Build Operate and Transfer franchise through a process that would attract one of the best known global port investors with proven financial and managerial capacity.

Source:
05.02.09 BD Africa

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