How China pushed Qatar out of Sh400bn Lamu port deal

The port of Lamu: The US envoy informed his superiors in Washington that China’s interest in the Lamu project was reportedly linked to the presence of oil in Southern Sudan and Uganda. Photo/FILE

Daily Nation | Friday, December 10 2010


A cable released detailing China’s interest in local economy shows negotiations involving development of Lamu port took place inside the “black box” of President Kibaki’s inner circle at State House.

The government, according to the cable from whistle-blowing website WikiLeaks, originally held discussions with Qatar over the development of the port in return for a substantial allocation of farm land.

“We understand, however, that talks with Qatar are off, and that the Chinese are in play as a potential partner for the port development project and associated regional infrastructure (road and rail infrastructure to Southern Sudan and Ethiopia, and pipeline infrastructure to Southern Sudan and Uganda),” revealed the communication from US ambassador Michael Ranneberger.

The US envoy informed his superiors in Washington that China’s interest in the Lamu project was reportedly linked to the presence of oil in Southern Sudan and Uganda, which could be exported via the port as well as the greater export potential to Ethiopia, Southern Sudan and Uganda.

China may be a potential partner in the development of the new mega-port at Lamu. The addition of possible oil from Isiolo, Ranneberger observed, would add impetus to China’s interest in the port development, which is estimated to cost more than Sh400 billion ($5 billion).

In fact, Kenya and China recently signed an Economic and Technical Cooperation Agreement, which provides about Sh580 million ($7.3 million) grant from China to Kenya.

Of the grant, about Sh12 million ($150,000) will finance a computer programme for the Ministry of Finance while the remaining funds can be used by the government to fund development projects of their choice.

The agreement also covered Chinese funding of feasibility studies for the potential development of Lamu port.

In addition, China committed to funding portions of the Northern Corridor road project, which links Mombasa and Nairobi to Ethiopia and Southern Sudan, as well as parts of the new Mombasa-Kampala standard gauge railway.

China is heavily involved in various infrastructure projects across Kenya, primarily roads. China Wuyi, Syno Hydro, and China Overseas Engineering Corporation are working on the Thika Road project, a major eight-lane highway from Nairobi to Thika town.

The China National Offshore Oil Company is drilling for oil in the Isiolo region. But China’s companies working in Kenya are said to import a substantial number of Chinese workers, which limits the number of Kenyans who directly benefit.

“The low Chinese bids on major projects also push local firms out of the process, especially in infrastructure areas where capacity building of local firms would be useful,” observes Mr Ranneberger.

The cables also report 90 per cent of the ivory smugglers detained at JKIA are Chinese nationals.

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