KENYA – Kenya is in talks with Transnet, a South Africa based rail, port and pipeline company to operate a seaport currently being developed which it plans to partly use for planned oil exports.

According to Bloomberg, Transnet is leading a group of companies that are pitching to provide the equipment for the initial three of 32 berths planned at Lamu port, and to operate the facility.

The port’s main purpose is to export oil and will link the pipeline, roads, rail and airports to neighbouring countries as part of a massive regional infrastructure plan.

Speaking to Bloomberg, Kenya Ports Authority managing director Daniel Manduku said the deal is still at negotiation stage and a decision is expected by the end of March.

Lamu would be Kenya’s second international seaport after Mombasa.

It was conceived as part of a regional infrastructure plan that includes an oil pipeline from Northwestern Kenya, where Tullow Oil plans to start commercial production in 2022.

This is part of the Lapsset Corridor project undertaken by the government of Kenya to intended to provide transport and logistics infrastructure aimed at creating seamless connectivity.

The project involves electric power supply, land survey and acquisition, strategic environmental assessment, security, transaction advisory services.

Also called Lamu corridor, the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) project is an ambitious transport and infrastructure initiative targeting to enhance economic prosperity.

In 2009, the cost of LAPSSET was estimated at US$16 billion but recent estimates arrived after studies now put the cost of the project at between US$22 billion and US$23 billion.

The deal with Transnet comes when Kenya’s President Uhuru Kenyatta is seeking to increase private investment to expand infrastructure and boost economic growth.

The country’s national treasury earlier said a group of companies is seeking a 25-year public-private partnership to operate the Lamu port.

In 2012, International Finance Corporation lent the equivalent of US$6 million to Singaporean logistics firm Portek to facilitate privatization of Magerwa Dry Port in Rwanda.

Portek’s investment in Magerwa fostered the development of a fuel oil bunkering facility in Kigali and other potential seaport facilities in Kenya and Tanzania.