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Projects earmarked for foreign investors

BETWEEN THE SHEETS
By | April 5th 2009

By Juma Kwayera

The regulations and attendant build, operate and transfer (BOT) provisions that guide how the Government enters public-private partnerships (PPPs) were gazetted mid-last month.

The gazettement followed concerns the Government was flouting the Public Procurement Oversight Act, which bars single-sourcing of potential investors.

Under the PPPs regulations the longest period provided for a private firm to partner with the Government is 30 years, although the relevant clauses leave room for longer leases. Lawyer Harun Ndubi says in such cases as the Tana River, Lamu port and the JKIA expansion deal, the Government signed 80-year concessions and will put national resources out of reach of Kenyans.

According to Transparency International Director Job Ogonda, the five 30-year lease is too long for public property to be under private control.

The regulations were gazetted by Finance Minister Uhuru Kenyatta on March 10 and provide that the Government can only partner with private sector for projects above Sh800 million.

The disposal and concessioning of public utilities to mobilise funding for the Government’s "flag-ship projects" — 98 in total — in reference to key areas that need heavy but urgent financial infusion to stimulate economic growth is intended to provide the impetus to meet Vision 2030 targets.

Out of these, 21 projects will be implemented in the six priority sectors: agriculture, manufacturing, tourism, wholesale and trade, BPO and financial services. The rest will be implemented in the priority sectors covered under the social and political pillars.

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JKIA deal

The Kenya Airports Authority (KAA) has entered an agreement with the Qatar-based Afro-Asian Investment Corporation to invest Sh28 billion in a five-star three-tower hotel complex that will cover 90 acres at the Jomo Kenyatta International Airport.

The complex will have a 750-bed capacity, a 200-inpatient capacity hospital and a business centre.

The concession period is 80 years under the build, operate and transfer investment module. It is projected that it will generate Sh18 million in land lease per year, plus $1 million (Sh80 million based on exchange rates) for five years in licence fees when completed.

Embakasi Airport deal

The Sh2.9 billion first came to light late last year. In the deal, Sri Lankan-born Arjun Razaik planned to inject Sh2.4 billion in developing a budget terminal at the Embakasi Airport in Nairobi under a build, operate and transfer agreement with the KAA, a State corporation.

Transport minister Chirau Ali Mwakwere, citing "errors" in the agreement, overturned the deal. Razaik, jointly with former Transport Permanent Secretary Dr Gerishom Ikiara, are planning to introduce a low-budget domestic airline — OneJetOne.

Qatar

Kenya has signed a $3.5 billion (Sh300 billion) deal with Qatar to build a new port in Lamu on the Indian Ocean coast. The Gulf state has acquired 80-year lease of 100,000 acres in Tana River basin to grow its own food.

Kuwait

Last year, the Government also sourced Al Bader International Development Company of Kuwait to invest in $15 billion Lamu seaport construction, a contract that will also see the Gulf-based company put its money in Lamu Regional Airport, a Lamu railway network and Lamu highway. Kuwait is also lining up to build an international pipeline, an oil refinery near Lamu port and a fibre-optic cable network.

Libya

The Libyan government acquired previously Government-owned Mobil Petroleum Company (now Oilibya) in 2007 with a further pledge of Sh21 billion for investment in the expansion of Momabsa-based Kenya Refinery Ltd. Last year, Libya controversially acquired Grand Regency Hotel for Sh2.9 billion. It is also eyeing the Bomas of Kenya and National Cultural Centre.

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