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Concerns Raised Over Proposed Infrastructure Project In Kenya

Many Kenyans are criticizing a controversial proposal by a Kuwaiti company to develop the historic area of Lamu on Kenya's north coast, saying that the proposal has not followed proper procurement procedures and gives away too much of the country's resources and sovereignty.

Al-Bader International Development Company first presented its proposal to the Kenyan government during a conference in March aimed at attracting investment into southern Sudan, a conference that Al-Bader International itself had co-organized.

The Kuwaiti company wants to build a commercial port, beach resort, airport, oil refinery and a railway, road, pipeline and fiber optic network in the historic Lamu area, an investment of around 20 billion dollars. The company is asking for free trade zones to be set up in the area.

Daudi Waithaka heads the Kenya-Sudan liaison office, a unit within the Office of the president that facilitates Kenyan business investment in southern Sudan.

Waithaka, who is pushing the proposal currently being examined by Ministry of Transport and other officials, explains to VOA why the Al-Bader proposal would be good for Kenya.

"The whole of eastern and northern Kenya has been marginalized for years. How come? No infrastructure. We can sit here and wait until we can raise some loans to build a road here, a road there," he said. "But their system will open up the whole of northern Kenya, the whole of eastern Kenya. New industries - for example, we have deposits of cement, coal, iron ore - these will be developed. If we link into Ethiopia, that's a market for Kenyan goods."

But what has critics raising eyebrows is what the company is expecting in return.

The original proposal calls for Al-Bader International to own the land in the Lamu area for a minimum of 20 years, during which the company can sell or lease that land without having to go through the Kenyan government.

All cargo vessels would be re-routed from the current port of Mombasa and could only load at the company's Lamu port. And, according to the proposal, Al-Bader would not be required to pay any taxes and would have the right to charge and collect user fees from the projects.

A letter written by Treasury Permanent Secretary Joseph Kinyua on July 7 expressed concerns about the company's tax exemption, the government's lack of control over the project's implementation, and other issues, and recommended that the government not sign a Memorandum of Understanding with the company unless substantial protective measures are put in place.

Earlier, on June 22, Solicitor General Wanjuki Muchemi outlined his problems with the proposal, which he says, in his words, grants the company absolute, unconditional rights in every respect of the project with virtually no fixed term.

He calls for the government to explain how Al-Bader International was selected for the project and provide more information about the company.

Kenyan economist and businessman Robert Shaw says he cannot see how the Kenyan government will collect any revenue from the project in at least two decades.

"All I can see is them saying, we will do X, Y, and Z, we will get all the benefits from it for 20 years, and we will hand it back after 20 years. It's a bit like being asked to sign a blank check for a whole area of activity on a rather large piece of land," he said. "The thing [proposal] is like ceding sovereignty. It's a completely open-ended deal. It's asking for a hell of a lot and if this government or this country was to make a commitment to this, we don't really know how extensive that commitment would be."

Shaw accuses Al-Bader International of using the Sudan investment conference as a way of by-passing the procurement process to get its proposal to the Kenyan government.

The Kenya-Sudan liaison office's Waithaka says the original proposal seen by VOA has been updated so that the government will be collecting some tax revenue, particularly concerning the resort city, although he would not specify the exact financial gains that the government would be getting from the project.

Waithaka rejects the idea that Al-Bader International has by-passed Kenya's procurement process or international procurement standards, saying that a government task force has been making presentations to investors and financial institutions for more than two years.

He said, "Well, it's been said we have not advertised, waited 41 days and then got the offer. But what is advertising? Is it just putting things in the newspaper? Or when you sit and talk to a whole lot of investors from around the world, and you say, this is what we are thinking, give us an offer, isn't that a form of advertising?"

Waithaka says Al-Bader International is heading a consortium of companies in the project, and there is still room for other companies to join the project.

The people of Lamu themselves have mixed reactions to Al-Bader International's proposal, with some supporting the development while others saying that the infrastructure and resort city could harm the area's conservative culture and fragile environment.

Omar Samau is chairman of Lamu County Council. He says that the project could be good for the area, but only under certain conditions.

"We would like to be part and parcel in terms of revenue collection. There must be some fees which the county council will be getting," he said. "I would like to see the Lamu community [being] given priority in terms of jobs, employment. We do welcome it [the project], but there must be a way that the Lamu community will benefit directly."

Samau says that an Al-Bader International delegation met with the council several months ago to briefly explain the project, but has not heard from them since. He says his council and other local officials should be included in the negotiations currently taking place.

Lamu District is located along Kenya's north coast and is made up of several islands including Lamu, Manda, and Pate. It is largely an agricultural and fishing community. Lamu is the oldest town in Kenya dating back to the 14th century and the only Swahili settlement in the country made up of people with mixed Arab and African descent.