Kenya Offshore Industrial Park Project at Lamu Port

AfDB Screening Presentation

Eric M. Njoroge

WIO Marine Limited

24th July 2019

 About WIO Marine Limited

100% Kenyan owned and controlled

Marine science research
Commercial research, development & demonstration of marine
renewable energy resources technologies
Develop marine renewable energy & offshore mineral resources
resources projects in Kenya’s Outer Continental Shelf and
internationally with national and global partners that support Kenya’s
industrial competitiveness.
 Opportunities for Investment in the Study Area
Plenty of land/storage capacity (Lamu SEZ
measuring approximately 10,744 Ha.) for
industrial, residential & commercial office
uses.
Huge growth market for marine renewables
and oil and gas (onshore & offshore). WIO
region (Kenya & Mauritius) is about to see a
significant increase in investment in marine
renewable energy (initially wind and later
wave and tidal). Tanzania & Mozambique
have major natural gas projects ongoing and
planned at various development stages.
Accessibility – Opportunities for improved
traffic connections and pedestrian movement
within the study area as well as adjoining
areas of Lamu County.
Lamu Port is physically close to the planned
major offshore project sites and it, together
with the local economy, should be able to
benefit from these major developments both
in the immediate future as well as in the
medium to long term.
Sustainable Transport - In line with
Government sustainable development
objectives, attention is being paid to moving
freight by rail rather than road. Whilst there is
limited scope for a direct rail access to the
study area, there is a freight area adjacent to
the port, which is close to the study area,
which will be in use in the medium term.
 Constraints for Development in the Area

Development potential and investment opportunities are to some extent

constrained by ongoing security challenges.
Whereas there is plenty of spare storage capacity within both port
sections, the capacity limiting factor is the quayside capacity.
Across the Lamu County, all roads are unpaved and in a deplorable state
which increases travel time. Flooding occasioned by poor drainage.
16Km2 (4kmX4km) Joint (Navy & Air Force) military base in the middle of
the port will reduce the berths by 8-16 & storage area by 40 Ha, create
serious difficulties, discontinuity and inefficiencies in port operations,
generate significant investment needs for extra infrastructure needed
(roads and rail lines) to deviate around it, generate concerns for high rise
structures due to fly zone safety requirements.
 Lamu Port Offshore Energy Industry Park

1600 meters (at FOC) heavy load deep sea quay – 600m initially
Education & training facilities for marine engineering, diving and
marine salvage, ship building & repair, drilling and well control, well
intervention, heavy lifting crane operations, underwater egress &
rescue swimmers, maritime security & defense, etc.
Heavy lift, logistics (land, air & sea), mobilization and demobilization
efforts (aviation, accommodation, search & rescue, etc.)
Engineering, Procurement, Construction, and Installation (EPCI) hub
for large scale fabrication of onshore/offshore platforms and
onshore/offshore modules
 Lamu Port Offshore Energy Industry Park cnt’d

Staging and assembly lay down storage areas to support the pre-
assembly, final assembly and quayside load-out (very close to wharf)
for offshore energy components
Large scale accommodation and food service facilities
Offshore wind turbine blade factory – OEM-built
General Purpose Warehouse (GPW)
Fiber optic expansion
Athletic and recreational facilities in the vicinity including but not
limited to a soccer field, basketball court, swimming area, etc.
 Business Model

The business model for an offshore service base is a project-based

business
The work executed at the base/site is much wider and more complex
than normal port operations.
It is also of great importance to the business model, who is going to
invest in and own the base (seabed, quays and surface) and
supporting infrastructure
At this point in time, this is going to be WIO Marine Limited
 Three (3) Business Models

The assumption here is that the infrastructure investment has been

done by the owner and will be covered either directly if the owner is
also the operator or indirectly if there is a leaseholder/concessioner,
who is operator. Three combinations envisaged:
Owner/operator
Owner + leaseholder/concessioner/operator
Owner + leaseholder/concessioner + operator
Depending on the combination, the revenue must be shared on a
cost/activity based principle.
 OSB Owner/Operator Services

The services provided are defined in three categories:

Infrastructure & Facilities
Logistic Operation
Total Integrated Logistics
The decision of “who is doing what” is dependent on the choice of
combination from above.
 OSB Contract

The contract will be based on the scope of services and is divided

into two revenue streams:
Recurring. The recurring revenue is simple based on price per unit
used (man-hours, port calls, ton, equipment hours etc.), hence the
usage of the service.
Fixed per time unit (month, project period). The revenue coming
from the time-based cost is typically related to the long-term
investments in infrastructure, buildings, etc.
The charges in terms of lease, rent and fee must be based on the
business case derived from the long-term market volume.
 Customers

On the envisaged offshore service base, we envisage two types of

customers; the OEM and the developer/marine contractor.
It varies who is the main customer, but it is normally the OEM who is
the main customer.
However, in some cases, the developer is the main customer and
may even provide the site as “customer furnished” for the main
contractors.
 Future Rivals/Competitors

Mtwara port offshore service base (OSB) by Shell/BG Group in TZ,

other companies such as Exxon Mobil, Equinor, Petrobas in TZ may
develop their own facilities or use Mtwara OSB
Bagamoyo port in TZ – will have high operating costs, also very far
away from gas fields in the south (commercially pointless)
Deep sea port and associated terminal infrastructure at Nacala in
Mozambique
 Port of Saldanha OSB in South Africa
 Feasibility Study Components

Feasibility study to analyze the technical, financial, and economic aspects of

developing the offshore energy industrial park
Market study for offshore renewable energy in this region including state of the
industry, opportunities, enablers and financial/funding mechanisms, best
practices for partnerships, sales, research, etc., a strategy for near and long‐term
business development
Better understand the legislation and regulations that might be required for the
development of offshore renewable energy in the WIO region – documentation
on the work activities involved in the full life cycle of offshore renewable energy
projects
Feasibility Study to develop an integrated master plan for the industrial park. This
is required to inform the development plan process (phasing) and the investment
decisions of public and private bodies who we have approached for funding
commitment
 Feasibility Study Components cnt’d

Legal support including either lease or purchase the public land from
where the planned waterfront facility investment will be put up (Lamu's
SEZ), due diligence services, taxation advisory services, etc.
Investigation of the deep sea vessels required to service these key offshore
projects’ sites. Entails Cost-benefits-risks Analysis Study by naval architects.
Construction Labour and Skills Analysis – Identify what is required to
ensure people in Kenya are ready to take advantage of the potential job
opportunities arising from an upcoming port facility construction activity in
Lamu
Skills Demand Analysis and Feasibility Study – A skills demand analysis,
surrounding energy, engineering, and maritime related provision
 Long-term Debt and Private Equity Financing

Commercial Lenders: EIB, USDFC (formerly OPIC), JBIC, SMBC, MUFG, Mizuho,
AfDB, ECAs (US EXIM, UK Export Finance, Korea Exim), African Export-import
Bank, Europen & North American banks, etc.
Sovereign Wealth Funds: Temasek Holdings, PIF of Saudi Arabia, Abu Dhabi
Investment Authority, Norges Bank Investment Management, Kuwait Investment
Authority, GIC Private Limited, Qatar Investment Authority, Investment
Corporation of Dubai (ICD), Mubadala Investment Company, Korea Investment
Corporation, Emirates Investment Authority (EIA), State General Reserve Fund
(involved in Bagamoyo’s port), etc.
Oil and Gas Companies: Saudi Aramco, Korea National Oil Corporation, JOGMEC,
etc.
Private Equity: Softbank, Berkshire Hathaway Inc., etc.
Pension Funds: Canada Pension Plan Investment Board (CPPIB), Alaska
Permanent Fund Corporation (APFC), etc.
Thank you!