Kenya, U.S. Companies in Talks on Multibillion-Dollar Port Deal

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

The U.S. companies want to take part in the Lamu Port Southern Sudan-Ethiopia Transport Corridor, which envisages the construction of a port, power plant, railway and other facilities, according to Issa Timamy, governor of Lamu county in southeastern Kenya. Discussions are being led by Aeolus Kenya Ltd., a closely held power and infrastructure developer known as AKL, he said in a phone interview on July 21.

“AKL has been in ongoing negotiations with the U.S. government and the government of Kenya proposing a suite of integrated, critical infrastructure solutions that will initiate Kenya’s Lapsset program,” the Nairobi, Kenya-based company said in an e-mailed response to questions on Sunday. It said the group of U.S. companies interested in the project, known as Lapsset, includes Bechtel Group Inc.

Discussions about the deal coincide with U.S. 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 in 2012, compared with U.S.- African trade of $99.8 billion, according to the Washington-based Brookings Institute.

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

‘Very Excited’

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

Bechtel, based in San Francisco, confirmed by e-mail on Sunday that it’s among the U.S. companies in talks with AKL. Kenyan presidency spokesman Manoah Esipisu said he couldn’t immediately comment when called on Sunday. Treasury Secretary Henry Rotich didn’t answer his phone when Bloomberg sought comment.

Projects being sought by AKL include an 880-megawatt liquid-natural-gas-fired power plant, an oil pipeline to transport crude finds in northern Kenya and neighboring Uganda, and six berths at a deepwater port in Lamu, according to Timamy. A desalination plant will also be built in Lamu to address water shortages in the area, he said.

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

Improving Security

Building the infrastructure will help alleviate the damage that has 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, include one in Mpeketoni, near Lamu, in June 2014 in which at least 60 people died.

The national government has taken measures to improve security in the area, including starting construction of a border fence, deploying more security forces and improving telecommunications to help encourage investors, Timamy said. AKL plans to ensure that the local community benefits from any projects that are signed, by providing education and training to enable local residents to get jobs, he said.

“The projects are designed to protect Kenyan interests, and will be funded privately by Kenyan and global investors,” AKL said.

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