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Kenya secures funds for $650 million airport expansion

19 September 2013, 19:00

Nairobi - Kenya's airport authority has received full funding offers from three banks to build a new terminal and second runway at its main airport, hit by a massive fire last month, that will cost $653 million, the transport minister said on Wednesday.

The plans to expand the ageing airport, a regional gateway for passengers and cargo, are not new but the authorities have come under pressure to speed up the expansion after the blaze destroyed the arrivals terminal.

The new terminal and runway will provide a further capacity of 40 million passengers, Transport Secretary Michael Kamau said, seen by government as necessary to cope with the anticipated boost to the economy the expected exploitation of oil reserves will bring.

Speaking to Reuters on the sidelines of a conference on the country's economy in Nairobi, Kamau declined to say which banks had offered funds to the Kenya Airports Authority, a parastatal.

He did, however, say the lenders would not require a government guarantee, suggesting the lenders are confident they can recoup their money on the project expected to get under way this year.

The old arrival hall remains a charred shell and the airports authority is relying on a makeshift terminal made out of giant tents to handle arriving passengers.

Even before the fire, Nairobi's Jomo Kenyatta International Airport, built in the 1970s to handle 2.5 million passengers annually, was struggling to handle more than 6 million people a year as its regional importance grew.

"The discovery of oil is a game changer in this country. I don't think people are sufficiently prepared for what is coming," Kamau said.

National carrier Kenya Airways has been blaming lack of capacity for delays to expand operations. The carrier, which is partly owned by AirFrance KLM, plans to more than double its fleet to more than 80 planes in five years.

Like most other sub-Saharan Africa nations, Kenya suffers a massive infrastructure deficit, holding back its economic growth potential.

There are signs a mega-port project on the north Kenyan coast may be gaining traction based on the commercial oil discoveries in Uganda and Kenya.

Kamau said a feasibility study into an oil pipeline linking South Sudan's oil fields to the Lamu port scheme had been completed.

"There are three companies that are willing to fund it with guarantees from oil revenues," he said, without offering details.

- Reuters


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