- lapsset

Transcription

- lapsset

THE PRESIDENCY
LAPSSET CORRIDOR DEVELOPMENT AUTHORITY
PROVISION OF CONSULTANCY SERVICES FOR UNDERTAKING TRANSACTION
ADVISORY SERVICES ON LAPSSET CORRIDOR PROJECTS
REQUEST FOR EXPRESSION OF INTEREST REF: LCDA/TAS/2014-15
(CONSULTING SERVICES – FIRMS SELECTION)
1. Introduction
The Government of Kenya (GoK) has provided the LAPSSET Corridor
Development Authority (LCDA) with financing towards the cost of
Infrastructure Finance and Public Private Partnerships (IFPPP) whose
overall development objective is to increase private investment in the
Kenyan Infrastructure market by improving the enabling environment to
generate a pipeline of bankable PPP projects. It is intended that part of the
proceeds of this fund be applied to eligible payments under the contract for
provision of Transaction Advisory Services for the LAPSSET Corridor
Development Program. The LAPSSET Corridor Development Authority
(LCDA) is working with:
-
The National Treasury
Ministry of Energy and Petroleum
Ministry of Transport and Infrastructure
Ministry of Lands, Housing and Urban Development
Ministry of Water, Environment and Natural Resources
Ministry of Devolution and Planning
Ministry of Interior and Coordination of National Government
Ministry of East Africa, Trade and Tourism
Ministry of Industrialization and Enterprises Development
Ministry of Agriculture, Livestock and Fisheries
Ministry of Defense
The LAPSSET Corridor Development Authority is now spearheading the
invitation of expression of interest documents from established
firms/consortia for the provision of Transaction Advisory Services.
Building Africas’ Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya 1
2. Background
The Lamu Port Southern Sudan – Ethiopia Transport Corridor Project
(LAPSSET) Development Authority (“The Authority”) in conjunction and
accordance with Kenya Vision 2030 is responsible for the development of
Kenya’s largest transport corridor at an estimated cost of US$ 26 billion.
The LAPSSET Corridor is intended to operate as an Economic Corridor with
the objective of providing multiple East African nations access to a large
scale economic trade system, the port will allow transport linkage between
Kenya, Ethiopia, and South Sudan, and thereby serve as a promoter of
socio-economic development in the region. Given the scale of the LAPSSET
project as a whole, the project has been broken down into the start-up
subsidiary projects (“sub projects”) as follows:i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
Port at Manda Bay, Lamu: LAPSSET/01
LAPSSET Interregional Crude Oil Pipeline; LAPSSET/02
Resort Cities at the shores of Lamu, Isiolo, and Turkana; LAPSSET/03
Lamu International Airport: LAPSSET/04
LAPSSET Railway Line; LAPSSET/05
LAPSSET Interregional Highway; LAPSSET/06
LAPSSET Interregional Petroleum Product Pipeline; LAPSSET/07
LAPSSET High Grand Falls Multipurpose Project LAPSSET/08
2.1 Kenya’s Development Agenda: The Vision 2030
A critical enabler for economic growth to this date remains the state of the
infrastructure. Its facilitative role in opening up new areas, fostering trade,
access to market and reducing the cost and time of doing business remains
foremost essential. In recognition of this vital role, the Kenyan government
has since 2003 invested heavily in infrastructure development especially
roads and energy, mainly concentrated in the High Potential Areas. Thus
the infrastructure development witnessed in the country has left vast
regions of the country covering Eastern, North Eastern and Coast under
developed.
Kenya’s long term development agenda is guided by Vision 2030 which aims
at transforming Kenya into a globally competitive, newly industrialized,
middle income country that ensures its citizens benefit from a high quality
of life in a clean and secure environment. The Vision 2030 is anchored on
the Economic, Social and Political Pillars. The Economic Pillar aims to
improve the prosperity of all Kenyans through an economic development
programme, covering all the regions of Kenya, and boosting the country’s
economic fortunes leading to rapid economic growth at above 10% annually.
The Social Pillar seeks to build a just and cohesive society with social equity
in a clean and secure environment. The Political Pillar aims to realize a
democratic political system founded on issue-based politics that respects
the rule of law, and protects the rights and freedoms of every individual in
Kenyan society.
The three pillars are anchored on several foundations which serve as
enablers creating an environment supportive of achieving set objectives.
These enablers include Infrastructure transformation, land and public
sector reforms, leveraging on ICT and STI, promotion of security, peace
building and conflict resolutions, ending drought emergencies and ensuring
adherence of National Values and Ethics as envisioned in the constitution.
The implementation of Vision 2030 is undertaken through detailed 5 year
plans and strategies commonly referred to as Medium Term Plans with the
maiden MTP of 2008-2012 having been implemented. The second
generation of MTP will run from 2012- 2017 and visualizes raising GDP
growth from 6.1% in 2013 to 7.8% by 2015 and beyond 10% in 2018,
premised on increased investment in the economy especially on
infrastructure sector. It also outlines a strategy for a stable macroeconomic
environment to facilitate high and equitable growth, ensure inflation is
confined to single digit and sustainable poverty reduction. Further it details
specific interventions aimed at reversing the worsening global rankings
which can impede participation of the private sector especially given the
urgent need to actualise Public Private Partnership (PPP) through structural
and institutional reforms.
The MTP II has emphasised the role of physical infrastructure in realisation
of the nation development targets. The areas to be given priority include
expansion and modernisation of the aviation facilities, improvement of
shipping and maritime infrastructure, expansion of the railway transport
and roads.
2.2 The LAPSSET Corridor
The LAPSSET Corridor Program is an integrated and multifaced led
infrastructure development Program aimed at creating a new economy in
Kenya with northern area of the country as the new growth frontier. Links
are expected to be established with the existing northern corridor which
runs from Mombasa through Nairobi, Eldoret - Malaba to Uganda and on
the other side through Kisumu - Busia to Uganda. By nature of the projects
and in order to generate sufficient cargo, economic activities and value
addition tapping on the huge agricultural potential, there is need to secure
the corridor.
Project studies that were completed in 2011 on the LAPSSET Corridor
project components showed great economic viability with most of the project
components registering High Economic Internal Rates of Return of
between 17% and 23.4% compared to acceptable industry minimum
standard of 10% for infrastructure projects as shown in table 1.
Table 1: LAPSSET Corridor Project Components with accompanying
cost implications
ITEM
A
B
PROJECT COMPONENTS
1)
Lamu Port
2)
Railway
3)
Highway
4)
Crude Oil Pipeline
5)
Product Oil Refinery
6)
Resort Cities
7)
Airports
SERVICES INFRASTRUCTURE
High Grand Falls (Hydro + Water)
Associated Infrastructure
Total Cost USD
TOTAL (KSH) TRILLIONS
2.403
QUANTITY
EIRR %
32 Berths
1,710Km
880 Km
2,240 Km
120,000bpd
3 Lots
3 Lots
23.4
17.8
12.9
21.6
13.9
20.8
20.7
1 Lot
Note 1: Jointly and individually, the projects are judged as viable in view of national economy
as EIRRs computed are more than 12%, which is opportunity cost.
Note 2: when sufficient cargo is generated by the Corridor, the higher EIRRs figures than the
study projections as per table 1 can be realized.
From the statistics provided, it’s therefore evident that if the government
structured the projects into bankable bundles, it would attract private
sector investors to participate and invest in the projects.
The seven key infrastructure project components of the LAPSSET Corridor
Program require substantial amounts of resources with a budget estimate
of US$24.5 Billion, equivalent to Kshs. 2 Trillion at current exchange
rates in construction costs. It is estimated that Lamu Port with its 32 berths
alone will cost approximately US$ 3.1 Billion, the Railway US$ 7.1 Billion
while the Crude oil pipeline will cost a further estimate of US$ 3 Billion for
Lamu to Lokichar trunk line alone.
Indeed the figures indicated above are of no mean task and cannot be left to
the Government’s limited resources alone. The Government has prioritised
the participation of private sector in the development of LAPSSET Corridor
infrastructure through infrastructure bonds and equity participation among
other money market instruments. There is already significant private sector
interest being registered towards the implementation of these project
components hence the need has arisen for the government to structure and
package bankable projects that are investor ready for uptake by private
sector.
2.2.1 LAPSSET Corridor Program components
a. Lamu Port at Manda Bay;
This is one of the economic enabling projects that will revolutionalize the
LAPSSET Corridor. The port constitutes a total of 32 berths. The
government will construct the first three berths and engage the private
sector to build the remaining 29 berths on the PPP framework. According to
the feasibility study conducted in 2011, the Lamu port has an economic
internal rate of return of 23.4% and therefore viable for private sector
investment.
Lamu port provides unparalleled niche in the transport sector in the
country. Compared to Mombasa which has only 19 berths, the port is
expected to generate cargo rivalling that of Mombasa by the year 2030.
Upon completion of three berths, it is expected 970 containers will be
handled here per day compared with 695 by Mombasa and significantly
increase to 1780 containers per day by 2030 outpacing Mombasa by more
than three times. Beside the Lamu port will have additional capabilities for
livestock and refrigerated cargo among others being shipped.
Further, the advantages the port accord the country are unmatched given
the geographical and terrestrial positioning of the port. The first three
berths are thus meant to create a business case for the entry of the private
sector and more so generate cargo for the railway in the long run and roads
in the short run.
A Limited Liability Company to be owned jointly between the Government of
Kenya, the citizens of Kenya and a strategic partner with not more that 25%
of shares will be formed to run the port.
Status
The government undertook ground breaking for the LAPSSET Corridor
Program at Lamu Port site on 2nd March 2012, after which it commenced
construction activities of various infrastructural facilities and services
aimed at progressing implementation of LAPSSET Corridor Project. The
summary for the projects implementation is as follows:
The commencement of construction of 1st 3 Berths of Lamu Port is planned
to be launched in the first quarter of 2015. So far construction activities for
preliminary facilities at Lamu Port are ongoing with some nearing
completion. Such facilities include construction of Port Headquarters, Port
Police Station, powerline to connect Lamu with the national grid and water
supply,
The Government has so far allocated approximately Kshs. 4.5Billion in
preparation for the commencement of construction works for the 1st three
berths. The government is also in the process of mobilising more resources
from its own revenue resources as well as from private sector investors
through equity and debt including infrastructural bonds while mobilisation
of more funds through equity and debt participation by investor for the
construction of the first three Berths and its associated infrastructure.
Contractor Ms China Communication Construction Company and
Supervision Consultants Yashoon Engineering will build the 1st Three
Berths at an estimated cost of Kshs 41 Billion of which Kshs. 4.5 Billion
has been provided to start works. The commencement date for the
construction is 1st quarter of 2015. Construction will take 5 years to be
completed by end of 2019.
The 1st three Berths to be constructed to attract Private Sector Investors for
Port Operations and construction of the remaining 29 Berths.
b. The Standard Gauge Railway Line
This will start from Lamu to Isiolo and then branch at Isiolo to South Sudan
and to Ethiopia while another one will run from Nairobi to Isiolo.
The long term sustainability of the whole corridor lies with visionary and
long term plans that place premium in future connectivity, trade increase
and population dynamics along the corridor construction necessary. Since
the Lamu port is expected to rival Mombasa in cargo handling, efficient and
affordable transport mode for this cargo lies with railway transport system.
The railway development project is an economic enabling activity which has
low recoup rate and not enviable for private sector investors. However, by
ensuring the port is fully operational and sufficiently active to generate
traffic for road and railway, the railway project converts to a viable option
for private sector and government to undertake. The railway component has
an economic internal rate of return of 17.8% which again is viable for
private sector investment.
Status
The Government of Kenya, represented by Kenya Railways Corporation and
LAPSSET Corridor Development Authority on 29th of October, 2014 signed a
Memorandum of Understanding with the China Civil Engineering
Construction Corporation Limited on the Preliminary Engineering Design
and Feasibility Study for LAPSSET Railway Project. The study will be
completed in March 2015. The study will provide required data and
information for transaction advisory services.
c. Highway from Lamu to Isiolo, Isiolo to Nadapal (South Sudan),
and Isiolo to Moyale - Addis Ababa (Ethiopia);
The planned highway runs from port of Lamu, through Garissa, Isiolo,
Turkana, Nakadok to South Sudan and a link from Isiolo to Marsabit,
Moyale and Ethiopia. This road network is expected to position the country
as a transport and logistics hub of unparallel means in the region.
The road network has immense benefits to the region and country at large.
First it will provide critical infrastructure necessary to provide services, and
grow trade in the areas it traverses through. Secondly, the road network is
expected to ease access to market and open the areas for expanded
economic activities. Studies have shown that the highways have an
economic internal rate of return of 12.9%.
Status
It is important to note that significant progress has been made on the
ongoing construction of LAPSSET Highway component, particularly the
505km Isiolo-Moyale A2 Road costing approximately Ksh.46 Billion and
being funded jointly by the African Development Bank ,European Union and
the Government of Kenya. Indeed, Kenyans and Ethiopians will soon be able
to enjoy improved transport and logistics services and transact business
between Addis Ababa, Lamu and Nairobi.
In addition to the above the Government of Kenya and the Government of
South Sudan, working together with the World Bank recently completed
feasibility studies and detailed engineering designs for the Lokichar Nadapal – Torit - Juba Road whose construction works will begin once
finances are mobilised.
Furthermore the Government of Kenya is currently undertaking detailed
Engineering Design of the Lamu – Garissa – Isiolo – Nginyang Road with
support from the African Development Fund. The design will be
completed by December 2015. The government has prioritized quick
delivery of the Lokichar - Isiolo - Garissa - Lamu Road. Delivery of the road
provides immediate road connection between Lamu Port and Juba and
Addis Ababa.
i) Lamu – Garissa (D568) 250Km), Garissa – Isiolo (C81,D586,B9)
(423Km) and Isiolo - Nginyang
ii) Isiolo – Moyale (A2) (505Km): Construction work is ongoing with;
iii) Isiolo – Merile (136Km) section at 100% completion.
iv) Merille – River Marsabit (123Km) Construction works ongoing at an
advanced stage 35%
v) Marsabit – Turbi (126Km) Construction works ongoing at an advanced
stage 75%
vi) Turbi – Moyale (128Km) Construction works ongoing at an advanced
stage 40%
vii)Kitale – Lodwar – Nakodok Road (623km): Designs are complete now
at Tender documentation stage.
viii)
Garsen – Lamu Road (115km): currently being contracted for
construction under Annuity roads program beginning early 2015.
With the proposed crude oil pipeline to Hoima oil field in Uganda, a road will
be constructed from Lokichar towards Hoima in Uganda which will be
combined as a package to the 864km LAPSSET road segment from Lamu to
Lokichar.
d. Crude Oil Pipeline and a Product Oil Pipeline;
The Government of the Republic of Kenya, the Republic of Uganda and the
Republic of Rwanda intends to construct a pipeline for transportation of
crude oil from the oil fields in the Albertine Graben in Uganda, Lokichar
Basin in North Western Kenya to the port of Lamu in Kenya. The
Governments have entered into a memorandum of understanding which will
promote and sustain the tripartite efforts to facilitate, enable and support
implementation of the project.
Between Lokichar and Lamu, the pipeline will run within the planned Lamu
Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor.
The pipeline is to be constructed in two lots, from Hoima to the border
between Uganda and Kenya and from the border through Lokichar to Lamu.
The pipeline shall include provision for interconnection to potential crude oil
pipelines from South Sudan.
During the 5th Northern Corridor Integration Projects Summit of regional
Heads of State and Government held in Nairobi on 2nd May 2014, it was
agreed that:
 The Hoima-Lokichar-Lamu Crude Oil Pipeline be developed as a single
project but split into two lots, Hoima to the Kenya/Uganda border,
and from the border through Lokichar to Lamu to be implemented
within agreed specifications and timelines.
 Partner States to engage a single consultant to ensure quality control
for the entire project;
 Each country to develop the portion (segment) within its territory; and
 Each Partner State to determine its own financing arrangement for the
project.
The crude oil pipeline is currently being jointly designed by the three
countries, Kenya, Uganda and Rwanda. An Inter-Governmental Agreement
(IGA) has been signed between Kenya and Uganda while the same is being
negotiated between Kenya and South Sudan. However, each of the three
countries will construct their side of the pipeline. The crude oil pipeline and
the product oil pipeline have an economic internal rate of return of 21.6%
and 13.9% respectively. Kenya intends to create a Limited Liability
Company to run the pipeline with a strategic investor allocated not more
that 25% shares while the Kenya Government and citizens owning the rest
of the shares.
The crude oil and the product oil pipeline are expected to tap on the
massive oil discoveries and the other projects such as the railway which can
be funded by the proceeds of oil sales.
Status
The government of the Republic of Kenya in conjunction with the
government
of the republic of Uganda in December 2014 hired
consultants to undertake Preliminary Engineering and Feasibility
studies on the Hoima – Lokichar – Lamu Port Crude Oil Pipeline. The
study will be completed in May 2015. The study will provide required
data and information for transaction advisory services.
e. International Airports at Lamu, Isiolo, and Lake Turkana;
Three international standard airports will be constructed in Isiolo, Lamu
and Turkana and will primarily serve the resort cities in these areas. The
construction of these airports is also aimed to give the country’s transport
sector great impetus by creating efficiency in the transport and logistics
sector.
The three airports are a prime avenue for investment especially by the
government given that airports are strategic investment avenues for a
country. However, various methods can be explored to ensure the private
sector participates in the development of these airports given the massive
resource needed to implement them. The three airports have an economic
internal rate of return of 20.7% and are deemed to attract the attention of
private investors through the public private partnerships framework.
Status
The government is putting in place the intermediate airport facilities so as
to grow transport and logistics business in the corridor to build the
business case for investors in the international status airport in the future.
The government recently completed lengthening of Lamu Manda Island
Airport runway from 1.1km to 2.3 kms. Improvement works are already
complete for the airport terminal building. Preparations are at an advanced
stage towards the construction of a parallel taxiway and aircraft apron area
to improve capacity of the airport. These improvements will enhance the
capacity of Manda Lamu Airport that already has a strong scheduled flights
clientele.
The Government has completed construction works on the 2.3km Isiolo
Airport runway. Construction works are currently ongoing for Airport
Terminal Building which is scheduled for completion by mid of 2015.
f. Resort Cities at Lamu, Isiolo and Lake Turkana;
Three resort cities are envisioned, namely; Lake Turkana, Isiolo, and Lamu.
These areas have unique tourist attraction sites, rich historical culture and
are highly unexploited. Lake Turkana, Isiolo and Lamu resort cities have
EIRR of 20.8%, 12.8% and 17.1% respectively. They can be developed and
operated by collaboration between public and private sectors. The type of
PPP is supposed to be “land lease type”, where lease charge is to be paid
annually by lessee (private resort operator) to the lesser (resort estate
owner).
The Isiolo Resort city is expected to tap on the five adjacent parks namely,
Mt. Kenya, Samburu, Meru, Aberdares and Marsabit. The climate is also
very enviable for holiday. Turkana too has its unique features apart from
being considered as the cradle of mankind it has got a very rich historical
association. The resort city in Turkana will ride on this historical
background, the Lake Turkana beach sun bathing, fishing expedition and
the warm climate that abound in this area and the rich cultural holding
import in the region and the national parks which include Sibiloi National
Park, the South Island and the Central Island National Parks. Lamu on the
other hand has for generations retained and sustained rich cultural
practices, has beautiful weather and immense coastal flora and fauna. The
resort city in Lamu is thus aptly positioned to revolutionize the tourism
industry in the country.
g. Merchant Oil Refinery;
Merchant oil refinery will be a purely private project. A business case will be
formulated after implementation of crude oil pipeline and consolidation of
crude oil capacity to support investment.
h. High Grand Falls Multipurpose Dam;
The High Grand Falls Multipurpose Dam is an enabling project intended to
create economic viable corridor by providing electricity, water to Lamu and
irrigation facilities in vast parts of the corridor. The HGFs should be
undertaken by the government as an early delivery project given it is a
critical success factor for downstream projects and the financing pegged on
oil profits.
The construction of the HGFs is expected to end the perennial floods
menace that occur downstream and use the harvested water for irrigation in
the Galana irrigation scheme. This will help in food securitization in the
country and provide raw materials for agric-industries.
i. Water Supply lines;
Demand for water along the corridor will be quite high especially for the port
and the Lamu Metropolis. The proposed construction of the High Grand
Falls Multipurpose Dam is expected to provide water to Lamu Port and
Lamu Metropolis. The Government therefore is expected to to undertake this
investment as an early delivery of the corridor project.
j. Power Supply;
One of the key Governments priorities along the corridor is to ensure the
transmission of electricity is adequate to meet the anticipated demand
intended to support the infrastructural service and the massive investments
planned. This has been planned with several power lines under
construction. Already, the electric power connection for the Lamu Port of
220kV transmission line from Rabai through Malindi and Garsen to Lamu
has been undertaken. Other power lines intended to boost supply in key
corridor towns like Garissa, Isiolo and Turkana are ongoing. These include:
1.
2.
3.
4.
5.
6.
7.
Rabai – Lamu 220KV Transmission Line completed
Garsen- Garissa 220KV Transmission Line to commence soon
Lake Turkana – Suswa 400KV Transmission Line to commence
Lamu – Garissa – Isiolo – Lokichar 220KV Transmission Line planned
Kindaruma – Garissa 132KV Transmission line
Masinga – Isiolo 132KV Transmission line
Kamburu – Isiolo 220KV Transmission Line
k. Fibre Optic Cable and Communication systems
This will enable countries spearheading the LAPSSET project to also attain
technological advancement through reliable, high-speed and cost-effective
voice data services. This will bring in Potential Development Opportunities
along the corridor counties such as Lamu, Garissa, Isiolo and Turkana and
other counties along the LAPSSET Corridor route will benefit heavily once
the fibre optic network is operational.
2.2.2 Generated Investment Opportunities in LAPSSET Corridor
To ensure integrated corridor development and to attract and generate
investments that can use corridor infrastructure, the adjacent land to either
side of the corridor of up to 50 Km will be planned and will have controlled
development. This land will serve as the economic corridor and will form a
Special investment zone and will be planned to generate productive
economic activities to sustain the corridor traffic. The economic potential of
this corridor will significantly evolve to provide sufficient cargo to sustain
the traffic in the corridor.
Among the economic activities that will be undertaken include farming,
livestock free disease zone, agricultural value chain addition enterprises and
factories, industrial and manufacturing parks such as petrochemical
industries, the Export Processing Zones (EPZ) and the National parks. Other
facilities that will be found in this corridor include cities and urban centres,
security installations, social infrastructure such as schools, health facilities,
Special Economic Zones and high technology industry that will leverage on
available resources along the corridor to create employment opportunities
and spur economic growth within the corridor counties and country at
large.
The county and the national governments will spearhead the controlled
development in the corridor and ensure proper urban planning and land
use management, identification and promotion of integrated investment
programmes, wildlife management and conservation, real estate
development and industrial packs as well as the mining and minerals
exploration. The service industry and provision of social utilities including
water reservoirs will also be accommodated in this corridor.
a. Agriculture
The importance of agriculture in Kenya both as a source of economic
growth, source of foreign exchange and for food security cannot be gainsaid.
The corridor traverses through vast parts of the country considered to be
Arid and Semi-Arid. These regions however have shown to possess huge
potential for irrigated farming with over ten types of crops depicting
significant yield ability.
The proposed High Grand Falls Multipurpose dam is expected to irrigate
huge tracks of land to the excess of 20,000 HA and will significantly alter
the economic dominant activities in the region and supply food to the
corridor. A further 20,000HA will be explored for irrigation farming around
Lake Turkana and this will boost the food security in the region and
eradicate the perennial famine that is witnessed in this region of the
country.
Studies done on the agricultural potential in the corridor area paint a
fascinating outcome with over ten crops shown that they can provide a
critical value chain. Among the crops which can do well in the area include
sugarcanes, avocados, maize, rice, mangoes, pineapples. Similarly, cattle
farming especially dairy farming can also do well in these parts.
The value chains and agro- processing therefore is an economic viable
venture which is compatible with investor interest, country competitiveness,
social impact, and market potential along the corridor. Some of the
proposed investments in the agriculture sector include;
Production and Processing of Beef in Isiolo: Large holding grounds for
live animals which will be sourced from pastoralists and which will provide
disease control and fattening of cattle before slaughtering and selling
processed meat to local and export markets with 60,000 Ha in Isiolo.
Nucleus Farm and Out grower Schemes in Tana River Delta: Seven
nucleus farms, each with 50 hectares totalling 350,000 Ha with mango
trees for production of the Ngowe variety and investment in smallholder out
grower schemes to supply existing mango processing facilities.
Cultivation & Processing of Sugar cane in Tana River Delta: Cultivation
of sugarcane and processing in Tana River Delta in about 10,000 Ha parcel
and processing into sugar through a sugar mill with a processing capacity
of 5000 tons of cane per day.
Sorghum growing in Turkana and Eastern Parts of Kenya: There is also
potential for sorghum growing in the upper region and in Turkana given the
favourable hot climate in these parts of Kenya. This can be grown for
domestic and commercial use and can be used in beer brewing both locally
and regionally.
b. Fisheries:
The corridor has potential to transform fish farming and processing both at
the Port of Lamu, Lake Turkana and along the corridor since there are
permanent rives such as River Tana and the proposed integrated High
Grand Falls which can be used for fish breeding. The Program intends to
establish Industrial Fish Processing Park in Lamu to process fish caught in
Kenya’s EEC and the surrounding environs of Indian Ocean.
c. Livestock Production
The LAPSSET corridor traverses vast areas of the region that are majorly
livestock breeding zone. For instance, in Kenya, save for Kajiado and Narok
which lies to the south of the LAPSSET corridor, all other parts lie to the
north. These parts include Garissa, Wajir, Isiolo, Moyale, Marsabit,
Turkana, Samburu, Baringo, Pokot, Marakwet and Tana River. The
communities in these areas are predominantly pastoralists and keep large
herds of cattle among other animals chiefly for meat.
Apart from the livestock found within the country, the corridor will also
provide a crucial link to Ethiopia, South Sudan and Somalia which are
among the largest exporters of livestock products. This will tap into three
key streams of livestock movement corridor that emanate from the
neighbouring countries into Kenya, namely;
 South – Sudan – Omo Basin – L. Turkana – Loiyangalani – Lokichar –
Kapenguria
 South Ethiopia – Moyale – North Horr – Marsabit - Isiolo
 Somalia – Mandera – Wajir– Garissa
The corridor will therefore provide a lifeline for the farmers whose economic
backbone is livestock keeping, opening up the areas and providing a
conduit for market of meat and other livestock products. In general, the
corridor will spur both domestic and regional trade in livestock products,
tame the persistent raids that characterize these areas and help control
animal diseases associated with livestock movement across the region while
economically empowering the people by providing a ready market for the
livestock products.
To ensure this is implemented successfully, cooling plants for meat, milk,
other livestock products and processing plants to add value should be
established in the economic corridor. This will address the incessant cattle
raids practice and spur economic growth in the region.
d. Industrial Parks
The entire economic corridor as should be packaged such that economically
viable industries are established. Value addition and manufacturing
industries should be set up to ensure the corridor generates jobs and
revenue for the government. The potential for both light industries and
value chain addition industries especially in the agricultural sector should
be explored.
Another industry that is expected to thrive in the corridor is the petrochemical industries. The recent discoveries of oil and petrol in Turkana,
South - Sudan and Uganda is expected to result to new industries. These
industries are expected to provide fertile grounds for new industries to
thrive and also give rise to manufacturing industries.
e. Urban Development
To ensure the LAPSSET corridor does not encounter the challenges facing
the urban setups found along the Northern Corridor, it is aptly necessary to
ensure proper urban planning. It is expected that urban centres will sprout
along the corridor and to cartel the haphazard developments there is need
for prior and detailed planning of urban development. The planning should
address current demands and potential future emerging concerns such as
population growth.
Public amenities, administration facilities, and security installation should
form the core part of urban planning. Therefore, Urban planning will be an
area that will attract investments along the corridor.
f. Real Estate Development
The development of infrastructure is usually a precursor for real estate
development. Opening up of areas through provision of efficient and reliable
power, transport system and other social amenities such as water and
security naturally leads to migration. One sector that has blossomed largely
of late is the real estate in the country. Evidence depicted new
infrastructure development such the Southern bypass indicate there is huge
appetite for real estate, with Diaspora uptake of up to 60%.
The LAPSSET corridor besides being a transport hub for the region is
expected to lead to massive influx of people. Economic activities, trade and
services envisioned in the corridor will attract manpower that will
require to be housed. It is also expected setting up of industrial parks and
special economic zones will lead to population explosion and the housing
needs for these migrants will be immense. As such, the need to structured
and planned real estate development will be inevitable. This is therefore a
critical area that needs to elicit investors’ attention and proper for attention
by all the stakeholders.
g. Energy
Along the corridor, there is huge potential for energy generation which if
explored would drastically cause the power and cost of energy in Kenya to
reduce.
The corridor also traverses areas which have huge deposits of coal which
can be exploited to cut down on the cost, a huge setback for manufacturing
industries in the country. The deposits can also be harnessed to provide
energy required to pump the crude oil pipeline to Lamu as well as refined oil
from the refinery to holding reservoirs.
The importance of electric energy in spurring economic growth is well
founded. In Kenya, the cost of energy has been inhibitive to growth of
manufacturing sector, industries as well as rural and urban households
connections. This has been a major hindrance for the country in realizing
economic objectives especially due to un-competitiveness of the Kenya
products, a good cost of which in due to high energy costs.
h. Service Industry
The development of the corridor is expected to alter the demographic profile
of the region majorly in search of better opportunities and also due to the
increased demand for services and goods. The corridor is also expected to
provide a dormitory area for the neighbouring countries population given
the vibrant economic activities that will be taking place in the border towns.
It is therefore anticipated that demand for services provision by the
government and the private sector is drastically increase.
Among the sectors the private sector is expected to play an active role
include Banking and financial exchange;
 Insurance and risks management;
 Trainings and human capital development;
 Legal and contracts service;
 Entertainment and recreation facilities;
 Clearing and forwarding;
 Telecommunication;
 Retail and wholesale enterprises; and
 Hotels and hospitality industry.
The private sector will over and above complement the government in
provision of key services and thereby make the corridor habitable and
conducive for investments.
i. Social Infrastructure and Services
The relevance of key social facilities such as health centres and schools
along the corridor is affirmed by government commitment to ensure they are
available and accessible to every citizen of the country. Other basic services
that need to be planned for and which are crucial for the operations along
the corridor are adequate and clean/safe water, decent housing, recreation
facilities and sports and environmental amenities that guard against
excessive environmental deterioration and pollution along the corridor.
Some of these will require the government at national and county levels to
directly invest while others can be implemented in partnership with the
private sector.
Adequate provision of these facilities is critical given the expected influx of
people to explore and take advantage of the many opportunities within the
corridor. Prior to this, clear and adequate measures needs to be developed
to make provision for sufficient land space and other resources to develop
these institutions and provide these essential services.
3. Objective of Transaction Advisory Services
The main objective of the consultancy is the provision of Transaction
Advisory Services for the LAPSSET Corridor Program and the relevant
project components within.
The appointed Transaction Advisors will assist The LAPSSET Corridor
Development Authority “The Authority” to strategically structure the project
components for implementation and raise and/or secure the required
financing for them.
The Program is a complex, large scale, cross sectorial infrastructure
development that encompasses the implementation of the above mentioned
sub projects, and the respective service supports required. Studies
undertaken by the Government of Kenya suggest that the seven sub
components of the project are economically viable given internal rates of
return of between12.9% and 23.4% compared to a global industry minimum
standard of 10% for similar infrastructure development projects, and that
the project will cost an estimated US$26 billion.
Given the formation of the Public Private Partnership Policy, and the
respective efficiencies and economies of scale that can be capitalized from it,
The Authority has proposed the use of a private sector led framework for the
implementation of the sub projects. Not only would this make the overall
project more viable from a development and operational perspective, but
also allow for less impact on public funds. The Authority therefore advises
the proposing transaction advisor(s) to consider the need to structure the
project(s), its financial arrangement(s), and operation(s) through private
sector participation.
4. Scope of Services
The scope of services for the assignment is sequenced in two phases. Phase
1 will entail preparation of project bankable documents and financial/
investment models. Phase 2 will cover financial arranging services and
implementation operations.
The scope of services will therefore be as follows:Phase I ;
a) Analysis of the most optimal debt to equity ratio for each project
component.
b) Identification and structuring of an efficient financing and or
investment plan for each project component.
c) Development of project component financial and or investment based
models.
Phase II
a) Management and oversight of the financing and or investment plan (
up to funds disbursement ) on the project component.
b) Implementation of the financing and or investment plan structures,
including public – private partnership arrangements and joint
ventures where applicable.
c) Completion of the relevant transactions through applicable and
relevant transaction advisory processes and procedures.
d) Preparing a sequencing plan for each project component.
4.1 Project Structuring: Advisors will be required to work with The
Authority and implementing MDAs to structure the project components
to ensure their bankability as well as structure the projects as per
international best practice standards, in order to attract high quality
local and international investors.
4.2 Identification of Innovative Financing-Options: Advisors will be
required to provide The Authority with alternative financing options. The
Authority will work together with the advisor(s) to explore and identify
the most cost effective and optimal financing option for each sub project.
4.3 Transaction Services and Structure of Transaction Team: The team
of advisor(s) should also include the following professionals:
4.3.1 Financial and Economic Advisors: The Financial and Economic
Advisors will be responsible for the identification of the most cost efficient
and optimal financing options available to address the capital needs for
the respective project components. The role of the advisor in regard to the
transaction will include but is not limited to the following:
a) Analysis on the most optimal debt to equity ratio for each sub
project;
b) Identification and structuring of an efficient financing plan for each
sub project;
c) Development of sub project based financial models;
d) Management and oversight of the financing plan (up to fund
disbursements) on the sub project;
e) Implementation of the financing plan structures, including publicprivate partnership arrangements, and joint ventures where
applicable; and
f) Completion of the relevant transaction(s) through applicable and
relevant transaction advisory processes and procedures.
4.3.2 Technical Advisors: The Technical Advisors will be required to
provide their expertise in areas of Engineering, Architecture, Quantity
Survey, Procurement and all other technical aspects of the sub
projects. They will also be required to evaluate the technical expertise
of the potential investors, as well as provide guidance and
information support to the financial advisors where applicable.
4.3.3 Legal Advisors: The Legal Advisors will be responsible in
ensuring that all project documentation, including but not limited to
contracts and agreements are structured in accordance with the laws
of the Republic of Kenya and comply with International Best Practice.
5. Consortia/Partner/Associate Firms: It is advised that a combination of
substantial local and international Transaction Advisors and/or local
Transaction Advisors with international networks will be more favorable
to the Authority as it is likely that a larger skill and knowledge base will
be of more advantage in the case of a project(s) of this magnitude.
6. The Authority, now invites eligible Transaction Advisory firms and/or
consortia to express their interest in providing this service. The
expression of interest is intended to shortlist firms that will be called
upon to submit detailed proposals before final selection is done.
7. To qualify for short listing, firms and or consortia MUST meet the
following conditions:i) Furnish detailed company information including business name,
location, address and contact person
ii) Provide a valid certificate of incorporation, trading license and tax
compliance certificate
iii) Provide detailed information demonstrating that they have the
required qualifications and have handled Transaction Advisory
Consultancies for integrated projects with at least 3 relevant
components with a combined value of at least US$ 5 Billion
iv) Interested firms/consortium should have a minimum of ten (10) years’
Transaction Advisory experience, especially in developing countries.
Note: Firms and/or consortia with prior government work experience in
complex Transaction Advisory Assignments will have an added advantage.
8. Firms and/or consortia are advised that Transaction Advisory services
are to be provided individually or as a package for either some or all
project Components mentioned in endnote one (1) of this document.
Firms and/or consortia are therefore permitted to provide Expression of
Interest for one or a package of more than one of the project
components.
9. Firms and/or consortia may associate with other firms in the form of a
Joint Venture or a sub-consultancy agreement to enhance their
qualification. These agreements must be signed by all parties and as
such shall be legally binding to all signatories.
10. Further information can be obtained at the LCDA offices at Chester
House Second Floor address below during office hours i.e. 0900 to 1700
hrs.
Expressions of Interest (EoI) documents shall be in plain sealed
envelopes
clearly
marked
‘EXPRESSION
OF
INTEREST
REF:
LCDA/TAS/2014-15:
CONSULTANCY
FOR
THE
PROVISION
OF
TRANSACTION ADVISORY SERVICES FOR THE LAPSSET CORRIDOR
PROJECT’ with the Consultancy Area and Reference Number clearly
indicated and should be delivered in person, sent by mail to the address
shown below or placed in the tender box at our physical address stated
below:
The Director General/CEO
LAPSSET Corridor Development Authority
Chester House, 2nd Floor, Koinange Street
P.O. Box 45008-00100
NAIROBI
So as to be received on or before Friday 27th February 2015, at 10.00 am
local time. This shall be the tender closing time.
The Expression of Interest documents shall be opened immediately
thereafter in the LAPSSET Corridor Development Authority Boardroom, at
Chester House, 2nd Floor, in the presence of candidates or their
representatives who choose to attend.
Late applications shall not be accepted.
DIRECTOR GENERAL /CEO
LAPSSET CORRIDOR DEVELOPMENT AUTHORITY

- lapsset

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