The mega-port that threatens to sink Sudan

The mega-port that threatens to sink Sudan

Last updated: 13 October 2013

Kenya project could offer South Sudan an outlet for oil exports but leave Khartoum out in the cold.

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As plans for a mega-port on Kenya's northern-most coast begin to take shape, new concerns are emerging that the project could damage already-strained relations between Sudan and South Sudan.
Kenya's $25.5bn Lamu Port and New Transport Corridor Development to Southern Sudan and Ethiopia (LAPSSET) includes the construction of a 32-berth port, three international airports, and a 1,500km railway line. A new oil refinery, in nearby Bargoni, and an oil pipeline are also planned. The pipeline would run to Kenya's Eastern Province before splitting, with one branch running to South Sudan's capital, Juba, and another through Moyale in the north to Addis Ababa. A 1,730km road network is also in the works.
The project is seen as central to development in Kenya, and East Africa more broadly. But as demonstrations across Sudan over fuel subsidy cuts continue, fears that the mega-port could further damage Sudan's ailing economy are looking more significant to regional security.
The Lamu mega-port would enable landlocked South Sudan to export its oil through Kenya, bypassing Sudan's Red Sea port and oil refineries. This would cause Sudan to lose the substantial transit fees it is paid by South Sudan. Sudan lost 75 percent of its oil reserves when South Sudan seceded in 2011, and political relations have been uneasy ever since.
'Huge threat' to Khartoum
"The Lamu project is a huge threat to Khartoum in terms of loss of revenue. These transit fees are high, partly because they also take into account a sense of compensation for the North letting go of the oil," EJ Hogendoorn, the International Crisis Group's Africa deputy program director, told Al Jazeera. "The fact is, South Sudan feels exposed and vulnerable, and they feel like they're being almost cheated by Khartoum."
Meanwhile, internal political pressure is mounting in Sudan, with opposition parties and the Girifna protest movement calling for the overthrow of Omar al-Bashir's ruling National Congress Party-led government, following security forces' violent dispersal of demonstrations across the country.
"Every day there are protests and sit-ins in several parts of Khartoum, as well as cities of Port Sudan, Alobaied, Sinnar and Wad Medani," Girifna member and activist Yosra Akasha told Al Jazeera.
"The violence from the government side will not stop the grieved people who demand life with dignity, justice and toppling down the NCP regime," she said.
The demonstrations began on September 23, after the government announced the cancellation of fuel and cooking gas subsidies, effectively doubling prices overnight. Human rights groups say security forces are responsible for the deaths of between 200 and 300 demonstrators.
War of attrition
Disagreements over oil have been a major point of contention in relations between the Sudans since secession talks became serious. In 2010, Concordis International, an NGO, stated that "oil is the main driver of national contestation over border demarcation".
Since the split in 2011, oil has remained the focus of diplomatic activity between the two countries. "The Sudans appeared to engage in what some termed an economic 'war of attrition' with each other for much of 2012," noted Lauren Ploch Blanchard, an Africa analyst at the Congressional Research Service, in an annual report.
For instance, Khartoum detained oil tankers and diverted large quantities of South Sudan oil in retaliation, it claimed, for the South failing to pay fees at its desired rate. Sudan originally demanded fees of $32-36 per barrel, but South Sudan counter-offered a payment of under $1 per barrel.
In September 2012 a deal was finally reached that set the fees at about $10 per barrel - well above the standard international level - but the stand-off was costly for both countries. Sudan's oil GDP dropped by 62 percent in 2012, and its external current account deficit grew to 10.8 percent of GDP.
Meanwhile, the Blue Nile and Southern Kordofan regions continue to be disputed by the two Sudans. Despite attempts at demilitarisation, the border between Sudan and South Sudan remains highly unstable, and political leaders have failed to reach an agreement securing the territory and reducing the risk of conflict.
Although the Lamu mega-port may add to these strains, its completion is still far off, and full funding is by no means assured.
"Little progress has been made on the infrastructure corridors beyond planning," Chatham House's Sudan and Somalia analyst Ahmed Soliman told Al Jazeera. "Building a pipeline to Lamu may be a stage too far." Soliman added that maintaining relations with Sudan, while simultaneously trying to cut it out of the oil export picture, would be difficult for South Sudan to swallow.
'Big boost' for Kenya
The mega-port is a major element of the Kenyan government's Vision 2030 initiative, which aims to modernise deteriorating infrastructure and boost economic output. The planned port, to be three times the size of Kenya's current biggest port in Mombasa, was originally conceived in 1975. But new plans were drawn up in 2008, and the project was finally launched last year.
The port and oil refinery are to be situated at Manda Bay, by the historic UNESCO world heritage town of Lamu. Oil pipelines will connect the port to Juba, South Sudan's capital, and to Addis Ababa, Ethiopia's capital.
A consortium headed by China Communications has won tenders to build much of the mega-port, and construction is under way on the road network and associated resort cities. A Chinese firm has won a nearly $500m bid for the port's first three berths, which will be equipped to receive newer, larger vessels.
Mugo Kibati, director general of Kenya's Vision 2030, told Al Jazeera that construction of those berths is expected to begin in the next couple of months.
"This is a big project and it will be a big boost for Kenya's GDP, opening up whole areas of the country that were previously quite closed off. It will also be a tremendous regional boost to the economies of four surrounding countries," Kibati said in a phone interview.
The project was predicated on South Sudan exporting oil to Lamu, instead of to Sudan. Uganda has also agreed to export oil to the new port. The oil facilities will be able to refine 120,000 barrels per day by 2015.