Work on Sh62bn Lamu-Isiolo road set to start mid-2018

Construction workers build a road.
Construction workers build a road.
Construction of a highway from Lamu to Isiolo is set to begin mid-2018 after funding details were agreed between Kenya and a South African state-owned bank.

Infrastructure CS James Macharia said Wednesday that the Development Bank of South Africa (DBSA) and Group Five Property Limited had signed an agreement for construction of the 530 km road that runs from Lamu port to Isiolo via Garissa.

“It is projected under the proposed commercial contract that construction of the 530 km highway will commence in mid-2018 and be opened for operations after four years,” Mr Macharia told reporters in Nairobi on Wednesday.

The Lamu-Isiolo road, which is the first section of the Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor project, will be completed in four years at a cost of Sh62 billion.

Construction of the 580 km road to bitumen standards will be financed under the annuity programme where the government negotiates low interest loans from banks to enable contractors to design, build and maintain a road for up to eight years.

The government would then repay the loan in equal instalments (annuity) over eight years from the time a given road is completed.

In October 2016, during a state visit of South African President Jacob Zuma, global investors led by the DBSA pledged to invest Sh196 billion into the Lapsset project.

DBSA, wholly owned by the government of South Africa, has previously arranged funding for projects in energy, water, ICT and transport sectors across Africa.

A brief by State House spokesperson Manoah Esipisu on October 16, 2016, indicated that a total of Sh124 billion would be used to set up three additional berths at Lamu port with Sh72.5 billion going to the Lamu-Garissa-Isiolo road.

The Lamu corridor project, which was commissioned by President Mwai Kibaki in 2012, is expected to open up northern Kenya for more trade and investment.

The project is identified as the long term conduit for Kenya’s oil exports through a crude pipeline linking Lamu to the oilfields in Turkana. So far construction of the Lapsset headquarters, which cost Sh866 million, and a police station are complete.

The Treasury has allocated Sh10 billion to the port project in the next financial year to finance the on-going construction of the first three berths.

Construction of the first berth of the Lamu port is expected to be completed by June 2018, with the second and third coming through in 2019 and 2020 respectively.