US, Kenyan companies discuss infrastructure deals amid Obama’s visit

KENYAN and US companies are negotiating a potential multibillion-dollar agreement with the Kenyan government to help develop the country’s biggest infrastructure project.

The US firms want to take part in the Lamu Port Southern Sudan-Ethiopia Transport (Lapsset) Corridor, which envisages the construction of a port, power plant, railway and other facilities, according to Issa Timamy, the governor of Lamu county in south-eastern Kenya.

Discussions were being led by Aeolus Kenya, a closely held power and infrastructure developer known as AKL, he said early last week.

“AKL has been in ongoing negotiations with the US government and the government of Kenya proposing a suite of integrated, critical infrastructure solutions that will initiate Kenya’s Lapsset programme,” the Kenya-based company said yesterday.

It said the group of US companies interested in the project included Bechtel Group.

Discussions about the deal coincide with US President Barack Obama’s visit to Kenya and come amid competition for influence in Africa, where China surpassed America as the continent’s biggest trading partner in 2009. Chinese trade with Africa reached $198.5 billion (R2.5 trillion) in 2012, compared with US-African trade of $99.8bn, according to the Washington-based Brookings Institute.

The suite of projects being negotiated by AKL was known as the American package, Timamy said.

‘Very Excited’

US Transport Secretary Anthony Foxx said last month that his government was “very excited about Lapsset and we want the American package to be considered”, according to a statement issued by Kenya’s presidency on June 25 after talks with President Uhuru Kenyatta.

Bechtel, based in San Francisco, confirmed yesterday that it was among the US companies in talks with AKL.

Kenyan presidency spokesman Manoah Esipisu said he could not immediately comment when called yesterday. Treasury Secretary Henry Rotich didn’t answer his phone.

Projects being sought by AKL include an 880 megawatt liquidnatural-gas-fired power plant, an oil pipeline to transport crude finds in northern Kenya and neighbouring Uganda, and six berths at a deepwater port in Lamu, according to Timamy.

A desalination plant would also be built in Lamu to address water shortages in the area, he said.

Kenya’s Treasury has estimated the Lapsset project will cost $26bn. The country envisages also building resort cities, an international airport and an inter-regional highway, according to the government’s website.

Building the infrastructure would help alleviate the damage that had been wrought on Lamu’s economy by attacks by al-Shabaab, Timamy said.

The county borders Somalia, where the al-Qaeda-linked militants have waged an insurgency since 2006. They’ve also carried out raids along Kenya’s coast, including one in Mpeketoni, near Lamu, on June 2014 in which at least 60 people died.

The national government had taken measures to improve security in the area, including starting construction of a border fence, deploying more security forces and improving telecoms to help encourage investors, Timamy said.

AKL planned to ensure that the local community benefited from any projects that were signed, by providing education and training to enable local residents to get jobs, he said. – Bloomberg