AFRICAN DEVELOPMENT BANK GROUP NEPAD – IPPF

NEPAD – Infrastructure Project Preparation Facility (NEPAD – IPPF) Support to LCDA for Transaction Advisory Services and Technical Assistance for Port Development PHASE 1 Lamu Port – Transport (L.A.P.S.S.E.T) Corridor Project PROJECT INFORMATION MEMORANDUM (PIM) Final Version

Prepared by: Reviewed by:

Alex Ndiku MBARAGA Codo PAMPHILE Infrastructure Specialist (Transport Sector) Principal Infrastructure Specialist ONRI/NEPAD - IPPF ONRI/FPPI-NEPAD Email: [email protected] Email: [email protected]

Approved by: Shem SIMUYEMBA Division Manager, NEPAD - IPPF Email: [email protected] Date of Final Submission: 22nd November 2016

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Table of Contents EXECUTIVE SUMMARY ...... iii SUMMARY TABLE ...... iv LIST OF ACRONYMS ...... vii LOGICAL FRAMEWORK (ENGLISH VERSION) ...... 1 CADRE LOGIQUE (VERSION FRANÇAIS) ...... 2 1. INTRODUCTION ...... 3 2. A SYNOPSIS ON LAPSSET CORRIDOR PROJECT ...... 3 3. LAMU PORT DEVELOPMENT PROJECT ...... 5 3.1 Planned Implementation of Lamu Port Development Project ...... 5 3.2 Potential Exports and Imports via Lamu Port ...... 6 4. TRANSACTION ADVISORY SERVICES AND TECHNICAL ASSISTANCE SUPPORT ...... 6 5. JUSTIFICATION FOR NEPAD – IPPF FUNDING ...... 8 6. KEY OBJECTIVES AND OUTCOMES ...... 9 6.1 Key Objectives ...... 9 6.2 Key Outcomes...... 9 7. RISKS AND MITIGATION ...... 10 8. IMPLEMENTATION STRATEGY ...... 10 9. ENVIRONMENTAL, SOCIAL AND GENDER STRATEGY ...... 11 9.1 Environmental and Social Management Assessment ...... 11 9.2 Gender and Social Equality ...... 11 10. PROJECT BANKABILITY ...... 11 11. COST AND FINANCING ...... 11 12. PROCUREMENT AND DISBURSEMENTS ...... 13 12.1 Procurement Arrangements ...... 13 12.2 Disbursement of Funds ...... 14 13. FINANCIAL MANAGEMENT, MONITORING AND REPORTING ...... 14 14. CONCLUSIONS AND RECOMMENDATIONS ...... 15 APPENDIX – A1 LAPSSET Corridor Projects and Regional Integration ...... 16 APPENDIX – A2 Land Usage Plan for Lamu Port Development ...... 17 APPENDIX – A3 Architectural View of Proposed Three Berths at Lamu Port ...... 18 APPENDIX – A4 Terms of Reference ...... 19

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EXECUTIVE SUMMARY

Lamu Port South Sudan – Ethiopia Transport (LAPSSET) Corridor Project is an infrastructure project dedicated to interconnecting the East African countries of , Ethiopia and South Sudan. Kenya is spearheading the implementation of the LAPSSET Corridor Project. Completion of the LAPSSET Corridor Project will strengthen the position of the East African region as a gateway and transport – logistical hub. LAPSSET Corridor Project comprises of two (2) key elements:

a. an infrastructure corridor of about 500 m wide, where the road, railway, pipelines, power transmission and other projects, including, proposed Lamu Port with thirty-two (32) Deep Sea Berths at Manda Bay; b. an economic corridor of about 50 km on either side of the infrastructure corridor where the industrial investments shall be situated;

The LAPSSET Corridor Project is a regional project with enormous economic viability, and upon its completion, the Project will facilitate trade, promote regional economic integration and interconnectivity, among other benefits. With good understanding of LAPSSET Corridor Project’s regional impact, a comprehensive assessment of the entire Project was carried out. Based on this assessment, Lamu Port Development specifically, the transaction advisory services and technical assistance were identified as components required for the successful realisation of the entire LAPSSET Corridor Project.

The key objectives of developing Lamu Port at Manda Bay include, providing the much needed Sea Port and transport link to serve the ‘ever-increasing’ import and export cargo base from Ethiopia, Kenya and South-Sudan, among other countries. Within its strategic framework, the LAPSSET Corridor Development Authority (LCDA – the Executing Agency) plans to operate and finance the development of Lamu Port through private sector investment/concession. In particular, the proposed thirty-two (32) Berths at Lamu Port shall be secured, operated and maintained as follows:

a. the first three (3) Berths shall be secured by concession to the private sector for operation; b. the reminder twenty-nine (29) Berths shall be procured either by concession or other financial structure principally, for construction and operation;

Following LCDA’s strategy and in line with Lamu Port Development, transaction advisory services and technical assistance remain key requirements. The Transaction Advisory Services shall help setup the ‘much needed’ and viable Transaction Plan for the development of Lamu Port. It is essential that the resultant Transaction Plan feasibly maps out all the key factors of the proposed Project, defines the transaction structure along with the scope and volume of the project in addition to defining the Project Parties and their contributions, among others. The Technical Assistance (TA) is targeted for specific activities/tasks including, stakeholder engagement and consultation, as part of ESIA, inter alia.

A NEPAD – IPPF Grant not exceeding USD 1,936,560 (i.e. One million, nine hundred and thirty-six thousand, five hundred and sixty, United States Dollars only), equivalent to 90% of the total project cost. A total of USD 205,030 (10%) shall be secured from the government of Kenya. With good consideration of the capacity of executing agency (LCDA) and the project, it is recommended that the Bank approves the Grant as part of the preparation measures essential for the development of Lamu Port at Manda Bay.

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SUMMARY TABLE

PROJECT NAME Lamu Port South Sudan – Ethiopia Transport (LAPSSET) Corridor Project

Region Eastern Africa

Participating Countries Ethiopia, Kenya and South-Sudan Lead Country Kenya

Executing Agency LAPSSET Corridor Development Authority (LCDA)

i. Port at Manda Bay, Lamu (Lamu Port Development Project) ii. Standard Gauge Railway (SGR) Line to Juba (South Sudan) and (Ethiopia) LAPSSET Corridor Project iii. Road Network (Seven Specific Projects) iv. Oil Pipeline (South Sudan and Ethiopia) v. Oil Refinery at Bargoni in (Coastal Line in Kenya) vi. Three Airports vii. Three Resort Cities at Lamu, and Lake Turkana Shores

LAMU PORT DEVELOPMENT : TRANSACTION ADVISORY AND TECHNICAL ASSISTANCE PHASE I

NEPAD – IPPF Funding Lamu Port Development - Transaction Advisory Services and Technical Assistance Support

Sector Transport Sector (Sea-Port Transhipment/Cargo Handling)

NEPAD – IPPF US $ 1,936,560 (90%) Budget Government of Kenya (GoK) US $ 205,030 (10%) Total Project Cost US $ 2,141,590 (100%) Justification of Lamu Port Improve inter-regional trade for importers and exporters from Ethiopia, South Sudan, Kenya and as Development well as compliment the Port of ; Expand transhipment operations; Boost service delivery i. Internal Working Group (IWG): October 3, 2016 Schedule for Review of PIM ii. Interdepartmental Working Group (IDWG): October 10, 2016 iii. Submission of PIM for the Vice President’s Approval: November 21, 2016 Implementation Schedule (Transaction Services and December 1, 2016 to May 31, 2018 (18 Months) Technical Assistance) Bank Related Activities Acquisition and Supervision of Consultancy Services

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SUMMARY TABLE (Cont’d)

PROJECT SCREENING AND TECHNICAL SCORING

i. LAPSSET Corridor Project Studies, which commenced in 2008 and were completed in 2011 shown that the overall project showed great economic viability with the most components registering High Economic Internal Rates of Return (EIRR) of between 17% and 23.4% compared to an acceptable industry minimum of 10% for Infrastructure projects. Lamu Port Development scored 23%. ii. On March 2, 2012, the Government of Kenya (GoK) undertook ground breaking for LAPSSET Corridor

program at Lamu Port Site. iii. Detailed engineering studies have been undertaken for the first 3 Berths of Lamu Port. On August 1, 2014, contract of first 3 Berths signed. Construction of the first 3 Berths ongoing to be completed by December 2019. iv. Strategic approach is to construct the first 3 Berths to attract Private Sector Investors for Port Operations and Construction of the remaining 29 Berths. The first 3 Berths are to be implemented in partnership with the private sector in a Public-Private Partnership (PPP) framework. Private investors to operate the first 3 Berths, and construct as well as operate the remaining 29 Berths.

PROJECT INFORMATION PROJECT v. Infrastructure facilities in-place at the Port of Lamu include, LAPSSET Plaza, Police Station, Electric Power Connection to the National Grid and Water Supply, Port management housing

KEY vi. In 2013 to 2014, a detailed Resettlement Action Plan (RAP) for Project Affected People (PAP) carried out and a comprehensive compensation to PAP at Lamu Port Site in last quarter of 2015 vii. In 2014, Environmental and Social Impact Assessment Study for Lamu Port Site, completed and received approval of the National Environmental Management Authority (NEMA) and Kenya Forestry Services viii. A number of Bilateral and Intergovernmental Agreements in-place between Kenya, Ethiopia, South-Sudan with regard LAPSSET Corridor Project

CRITERIA MEANS OF VERIFICATION WEIGHT/SCORE a. Written agreements/MOU between/among the participating countries; Institutional and b. Formal designation of Lead Institution by participating countries; Implementation 18 out of 20 Arrangements c. Written records of meetings demonstrating ownership/commitments by the governments/projects sponsors; a. Priority in regional programme, infrastructure, masterplan or continental initiative (PIDA, PICI, REC etc.,); Regional and National b. Priority in Sector Master Plan (Corridor Authority, Power Pool, River Basin, 20 out of 20 Alignment etc.); c. Priority in pipeline of DFI e.g. AfDB’s RISP, CSP; or other DFIs; d. Priority in National Development Plan (NDP), Infrastructure Plan, etc.; a. Availability of Project Concept Note (PCN); b. Availability of precedent study report(s) or project assessment study requiring Project Readiness 17 out of 20 updating; c. Availability of other relevant supporting studies or assessments; a. Evidence of project being part of funding pipeline of DFI, bilateral/multilateral donor or other financiers/investors; b. Proof that the project appears in the NDP in terms of budget allocation; Financing Prospects 10 out of 15 c. Evidence of DFI/Donors funding, interest, commitment or pledge; d. Evidence of developer/sponsor/concessionaire interest, commitment or pledge; a. Proof of ability to make mandatory counterpart contributions; b. Counterpart contributions will range from 5% to 20% depending on the Counterpart country and in line with AfDB classification (such as, Fragile States, Low Contributions & Co- 12 out of 15 Financing Income Countries and Middle Income Countries); c. Proof of ability and commitment to making additional co-financing contributions

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SUMMARY TABLE (Cont’d)

CRITERIA MEANS OF VERIFICATION WEIGHT/SCORE a. Proof that project is situated in area/region with low connectivity and would foster improved integration and connectivity; b. Evidence that project is new regional priority with formal approval of relevant Regional Connectivity 5 out of 5 regional institutions; c. Re-submission of cancelled /re-designed project and proof that issues around initial cancellation have/will be addressed in re-submitted project; a. Proof of high level political buy-in /championing; b. Evidence that project is new regional priority with formal approval of relevant Supplementary regional institutions; 4 out of 5 Considerations c. Re-submission of cancelled /re-designed project and proof that issues around initial cancellation have/will be addressed in re-submitted project; 86 out of 100 Total Score (86%)

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LIST OF ACRONYMS

AfDB: African Development Bank AU: African Union EAC: East African Community ICT Information and Communications Technology LAPSSET: Lamu Port South Sudan – Ethiopia Transport LCDA LAPSSET Corridor Development Authority M&E: Monitoring & Evaluation NEPAD – IPPF: New Partnership for Africa's Development - Infrastructure Project Preparation Facility NGO: Non-Governmental Organisation NPCA NEPAD Planning and Coordination Agency PAR: Project Appraisal Report PCR: Project Completion Report PIU: Project Implementation Unit PPP: Public Private Partnership PSC: Project Steering Committee QCBS: Quality and Cost-Based Selection SL: Short Listing SPN: Special Procurement Notice TAP: Technical Advisory Panel TL: Team Leader

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LOGICAL FRAMEWORK (ENGLISH VERSION) PROJECT NAME LAMU PORT South Sudan – Ethiopia transport (LAPSSET) Corridor Project COUNTRIES Ethiopia, Kenya and South Sudan REGION East Africa NARRATIVE MEANS OF VERIFICATION ASSUMPTIONS/RISKS AND DESCRIPTION OBJECTIVELY VERIFIABLE INDICATORS (OVIS) SUMMARY (NS) (MOV) MITIGATION Substantial increase in tonnage handling cargo, among EAC Risk: Competent firm with

member or partnering countries once all the 32 Berths are experienced personnel to constructed and operational by 2045 provide services and Undertaking the transaction advisory deliverables Reports services and technical assistance Forecast Data support for Lamu Port Development Implementation and development of Lamu Port components Mitigation: Effective pre- will trigger the development of the other projects/components evaluation of key technical

SECTORAL GOAL SECTORAL as per the LAPSSET Program staff and assessment through progress reports Structuring the port implementation Implementation of transaction plan and schedule for PPP Risk: Harmonization of using viable financial analysis and framework, including harmonization of procurement policies procurement Policies for the model into public-private partnership and related issued in agreement with all key stakeholders purposes of PPP Framework

(PPP) framework development &

Forecast Data Implementation Reports on seminars, and the Advisory on Financial Model for Implementation of project funding and resource acquisition donors, and potential private Mitigation: Effective Funding of Lamu Port Component PROJECT PROJECT investors’ roundtable, etc. coordination & Technical OBJECTIVES assistance support to help coordinate specific project Advisory on Market Sounding for the Effective and well-organized Port operations activities for procurements Sustainability of the Port Operations and PPP structuring

Output 1. Financial Models for financial structuring (construction of the 29 Berths, and operating of 3 Berths) at Lamu Port Output 2. Effective and efficient management and operational framework for Lamu Port (technical assistance) OUTPUT Output 3. Transaction Plan and Schedule detailing from financial inception to financial closure

COMPONENTS COMPONENT COST NEPAD - IPPF CONTRIBUTION GoK CONTRIBUTION A. Transaction Advisory Services US $ 1, 345, 890 US $ 1, 345, 890 - B. Technical Assistance US $ 560, 670 US $ 560, 670 - C. Administrative Expenses US $ 205, 030 - US $ 205, 030 ACTIVITIES D. Contingency (Project Audit, etc.,) US $ 30, 000 US $ 30, 000 - Total Cost US $ 2, 141,590 (100%) US $ 1,936,560 (90%) US $ 205,030 (10%)

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CADRE LOGIQUE (VERSION FRANÇAIS) NOM DU PROJET LAMU PORT South Sudan – Ethiopia transport (LAPSSET) Corridor Project PAYS Ethiopia, Kenya and South Sudan RÉGION Afrique de l'Est RÉCIT RISQUES ET DESCRIPTION INDICATEURS OBJECTIVEMENT VÉRIFIABLES MOYENS DE VÉRIFICATION RÉSUMÉ ATTENUATION Augmentation substantielle du tonnage de manutention des Risque: Société compétente

marchandises, entre membres de la CAE ou des pays en avec un personnel partenariat, aussitôt que 32 Amarres sont construites et expérimenté pour fournir des Entreprendre des services conseil opérationnelles d'ici 2045 services et des livrables en matière de transaction et Rapports SECTORIEL d'assistance technique dns le cadre Previsions de données Atténuation: Efficace pré- du projet développement du Port Mise en œuvre et le développement de composantes du Port évaluation du personnel Lamu Lamu va déclencheront le développement des autres projets / technique clé et de composants en fonction du programme LAPSSET l'évaluation par le biais des OBJECTIF OBJECTIF rapports d'étape Structurer la mise en œuvre du port Risque: Harmonisation des Mise en œuvre du plan de transaction et du calendrier en utilisant une l'analyse et un politiques adaptes au PPP, y compris l'harmonisation des politiques modèle financier viable dans e d'approvisionnement dans le d'approvisionnement et sujets connexes en accord avec cadre d’un Partenariat Public-Privé cadre du développement et toutes les parties prenantes de la mise en œuvre de (PPP)

Prévisions de données Consultation sur le modèle financier Mise en œuvre du financement du projet et l'acquisition des Rapports des séminaires et Atténuation: Une pour le financement de la ressources tables rondes des donateurs, et coordination efficace et un PROJET composante Port Lamu potentiels investisseurs, etc. assistance technique pour OBJECTIFS aider à coordonner les Consultation sur l’étude de marché activités de projets pour le développement durable des Opérations portuaires efficaces et bien organisées spécifiques pour les opérations portuaires acquisitions la structuration PPP

Sortie 1. Modèles financiers pour la structuration financière (Construction des 29 Amarres, et l’exploitation de 3’Amarres) au Port Lamu. Sortie 2. Gestion efficace et efficiente et cadre opérationnel pour Port de Lamu (support / assistance technique) LES

SORTIES Sortie 3. Plan de transaction et calendrier du rapport de démarrage au bouclage financier

COMPOSANTS COMPOSANTS COÛT FPPI - NEPAD CONTRIBUTION GoK CONTRIBUTION A. Conseil en transactions US $ 1, 345, 890 US $ 1, 345, 890 - B. Support technique US $ 560, 670 US $ 560, 670 - C. Dépenses Administrative US $ 205, 030 - US $ 205, 030 ACTIVITÉS D. Contingence (Audit du projet, etc.,) US $ 30, 000 US $ 30, 000 - Coût Total US $ 2, 141,590 (100%) US $ 1,936,560 (90%) US $ 205,030 (10%)

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1. INTRODUCTION

NEPAD - Infrastructure Project Preparation Facility (NEPAD - IPPF) is a multi-donor trust fund managed by the African Development Bank (AfDB) on behalf of NEPAD agency. NEPAD – IPPF supports the development of regional and continental infrastructure with grants to the African governments, Regional Economic Communities (RECs) and African infrastructure-related institutions. The objective of the grants is to enable infrastructure stakeholders to prepare high- quality, viable trans-boundary projects in the sectors of energy, water resources, transport as well as Information and communications technology (ICT). NEPAD-IPPF’s key objective is to ensure preparation of economically, environmentally and socially sustainable regional infrastructure projects in agreement with the priorities of the African Union (AU), and NEPAD Planning and Coordination Agency (NPCA). The key goal of fostering regional infrastructure development, is to enhance economic growth and regional integration, inter alia. NEPAD –IPPF’s new strategy is to fund and/or support three (3) key infrastructure project components that, include: i. Studies, which include, pre-feasibility and feasibility as well as market related studies along with other preparation activities allied to the effective completion of detailed engineering designs, financial or economic related project preparation activities; ii. Transaction Advisory Services, which comprise of transaction analysis and project structuring and/or packaging including PPP; Pre-contract services that include preparation and revision of tender documents, launching, processing, evaluation of bids and contract negotiations, among other related aspects; iii. Project Marketing and Fundraising, which specifically, include technical assistance in terms of preparation and delivery of workshops, road shows, seminars and conferences involving stakeholders, investors and lenders, among other participants or parties of interest; With the aim of ensuring that, every infrastructure project is bankable, NEPAD – IPPF conducts a technical screening based on the scope of activities, project’s regional impact (regional integration, economic growth and financial viability), as well as overall project readiness, inter alia. The Lamu Port South Sudan – Ethiopia Transport (LAPSSET) Corridor project, (specifically, Lamu Port Development project – Phase 1), has undergone a technical screening as provided in the Summary Table and thus, considered a viable infrastructure project for NEPAD – IPPF funding. 2. A SYNOPSIS ON LAPSSET CORRIDOR PROJECT

LAPSSET Corridor is a transportation and infrastructure project in Kenya, which when completed will be a key regional transport corridor. Although the basic LAPSSET infrastructure facilities such as, the Police Station, Harbour Office in Lamu and lengthening of Lamu Airport runway have been built, construction of the key infrastructure components has not yet been embark on. The key infrastructure components include, Ports, Pipelines, Roads and Railways, as outlined in the Summary Table. LAPSSET Corridor program exemplifies remarkable regional potential, and when completed the Project shall avail positive benefits to the regional member states and the continent, as a whole. The LAPSSET Corridor project has two (2) major elements: i. infrastructure corridor of about 500 m wide where the road, railway, pipelines, power transmission and other projects, including Lamu Port Development project shall be carried; ii. economic corridor of 50 km on either side of the infrastructure corridor where industrial investments shall be situated;

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The entire LAPSSET Corridor project comprises of seven (7) key-sector projects as laid out in the Summary Table. For easy identification, the following outlines the key-sector projects under the entire LAPSSET Corridor Project: i. Project 1: Port at Manda Bay, Lamu (referred to as, Lamu Port Development) ii. Project 2: Standard Gauge Railway (SGR) Line to Juba (South Sudan) and Addis Ababa (Ethiopia) iii. Project 3: Road Network iv. Project 4: Oil Pipeline (South Sudan and Ethiopia) v. Project 5: Oil Refinery at Bargoni in Lamu County (Coastal Line in Kenya) vi. Project 6: Three Airports vii. Project 7: Three Resort Cities at Lamu, Isiolo and Lake Turkana Shores While, the LAPSSET Program was conceived in 1975, it was only revived early 2000s, and included in Kenya’s Vision 2030. The cost of the entire LAPSSET project was estimated at USD 16 billion1 in 2009. However, recent studies estimate the entire project cost in the range of US $ 22 billion2 and US $ 25 billion3. In 2012, the cost of the project was put at about USD 29.24 billion4. In March 2013, the LAPSSET Corridor Development Authority (LCDA) was established through a Presidential Order, ‘LAPSSET Corridor Development Authority Order 2013’. LCDA is mandated to plan, coordinate and manage the implementation of the entire LAPSSET Corridor Project. LCDA is the policy implementation, operational coordination, and technical oversight organ for the entire LAPSSET Corridor Project. LCDA estimates the cost of the seven key infrastructure project components to be over USD 24.5 billion, (an equivalent of about, K.Shs. 2.4 Trillion). In particular, the first 20 berths of Lamu Port alone, are estimated at approximately USD 3.5 Billion. LCDA anticipates that, the entire LAPSSET corridor project, which commenced in 2012, will be completed by the year 2045. LAPSSET Corridor studies commenced in 2008, and were completed in 2011. From the studies, a number of LAPSSET’s infrastructure projects register High Economic Rate of Return (ERR) within the range of about 17% to 23.4% compared to the market acceptable minimum standard of 10% for infrastructure projects. In particular, four (4) out of the Seven (7) infrastructure project components registered an ERR between 20% and 23%. Of interest, Lamu Port registered an ERR of 23%, Crude Oil Pipeline with 21.6%, Airports and Resort Cities about 20% each. Furthermore, a number of bilateral agreements and memorandum of understanding (MOUs), have been signed between Kenya (as the lead country), and the partnering states, including some of the neighbouring countries, like the Republic of Uganda. These agreements, and MOUs include: i. Road and Transport Agreement signed between Kenya and Ethiopia, Kenya and South Sudan; ii. Railways Agreement signed between Kenya and Ethiopia from Lamu Port to Addis Ababa Railway line; Kenya is currently initiating a draft MOU to be negotiated with South Sudan to pave way for bilateral Agreement by the end of 2016. These two Agreements will lead to the formulation of a Joint Railway Coordination Commission to be established between Kenya and the partnering countries; iii. Crude Oil Pipelines, whereby Intergovernmental Agreement signed between Kenya and Uganda, and signed memorandum of understanding (MOU) between Kenya and South Sudan. These undertakings will enable the establishment of a Joint Crude Oil Pipeline Commission.

1 All Africa.com, February 28, 2015: ‘KENYA: LAMU’s US $16 Billion Makeover’ 2 Africa Review, April 2, 2015: ‘Kenya Poised to Roll Out Ambitious K.Shs. 2 Trillion Transport Corridor Project 3 Africa Review, April 2, 2015: ‘Kenya Poised to Roll Out Ambitious K.Shs. 2 Trillion Transport Corridor Project 4 Africa Review May 2013: ‘Kenya Sets Up Agency for USD 29 Billion South Sudan, Ethiopia Project

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Following this comprehensive understanding of the current status of the entire LAPSSET Corridor project, NEPAD – IPPF identified Lamu Port Development as an essential project component for funding. The basis of this follows a comprehensive assessment of the required project preparation activities of the entire LAPSSET Corridor Project and the readiness of the different sets of project along with their impact to regional integration and economic growth, inter alia. Key information, as typified in the Summary Table reveals that, the Lamu Port Development project remains an essential project to the entire LAPSSET Corridor project. 3. LAMU PORT DEVELOPMENT PROJECT

The Lamu Port infrastructure project comprises of thirty-two (32) Deep Sea Berths, including all associated infrastructure facilities. Construction activities for the various facilities at Lamu Port is ongoing. The implementation schedule for Lamu Port development is outlined as follows (including, completed and planned key project phases): i. On March 2, 2012 the government undertook ground breaking for LAPSSET Corridor Program at Lamu Port site, after which it commenced with the construction of the various preliminary infrastructure facilities and related services at the site; ii. Detailed engineering studies have been undertaken for the first three (3) Berths at Lamu Port; iii. A Contractor and Supervision team have been procured for the construction of the first three (3) Berths of Lamu Port project at an estimated cost of K.Shs. 42 Billion (USD 414,9 million); iv. Contract for the first three (3) Berths at Lamu Port was signed on August 1, 2014, and the contractor has already been mobilised to start construction of the three (3) Berths; v. Construction of the first three (3) Berths will take five years to complete (Deadline by, August 2019) LCDA’s strategic framework aims at operating and financing the development of Lamu Port, principally through private sector investment. The first three (3) Berths at Lamu Port shall be secured by concession to the private sector for operation. The remaining twenty-nine (29) Berths will be procured either by concession or other financial structure for both, construction and operation. At the Lamu Port, the Port Headquarters, Police Station, Electric Power connection to the National grid and water supply are already in-place. Subsequent to the completion of the first twenty-four (24) Berths, Lamu Port will have the capacity to handle about 23 million tons by 2030. However, the challenge is ensuring that the procured operation and construction through private sector financing are structured into feasible financial and legal frameworks, inter alia. For this very reason, LCDA needs to procure transaction advisory services (as part of consultancy service) and technical assistance in terms of stakeholder engagement and consultations in addition to key activities aimed at the preparation of the project for bankability. These undertakings shall spur the operation of the first three (3) Berths as well as the construction of the reminder twenty-nine (29) Berths. 3.1 Planned Implementation of Lamu Port Development Project

Development of Lamu Port will accelerate the undertaking or realization of the other infrastructure elements as listed in Section 2. The implementation plan of Lamu Port development shall be in three phases: i. Short Term Development Plan: This is scheduled to run up to August/October 2019. The short term development includes, construction of the first three (3) Berths typically, one Berth each, i.e., Bulk (1), Container (1) and general Cargo (1) along with their respective infrastructure facilities; ii. Medium Term Development Plan: This is scheduled to run up to end of 2030. It is planned that by 2030, the Port would have grown to a total of twenty-four (24) Berths on the West Coast of Manda Bay, comprising of four (4) Berths for Bulk, six (6) Berths for Container, ten (10) Berths for Cargo and one (1) Berth for Oil. Additionally, during the Medium Term Development, one (1) Oil Product Berth, one (1) Coal

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Berth and one (1) Liquidified Natural Gas (LNG) on the Plate Island shall be implemented. Similarly, two (2) Single Point Mooring Buoys (SPMBs) shall be located on the Plate Island and the Offshore. iii. Long Term Development Plan: This is planned to run up till the end of 2045. It is envisaged that, by 2045, construction of all the thirty-two (32) Berths at Lamu Port would have been completed. Further developments are to be implemented besides the Lamu Port, and include: i. New Port City (Lamu Metropolis), which comprises of port related industrial and urban areas; ii. Resort City linked with five satellites tourism sites; iii. International airport and; iv. Two power stations; For instance, the Lamu Metropolis will grow tremendously whereby the population is projected to be about 1.25 million people. When implemented, these developments shall increase investor potential for the development of the Lamu Port through private sector concessions or other form of financing structure. 3.2 Potential Exports and Imports via Lamu Port

Lamu Port is deemed to be the largest, deep sea port with viable transshipment capabilities on the East African Coast. The port is envisaged to serve a larger regional economy growing at an average of 5%+ GDP growth rate. The major import to be handled by the Lamu Port would be the Bulk and Break-Bulk cargo such as grain, steel and transport equipment, among others. The export cargo to be handled would mainly include, agriculture products and primary industrial products such as, processed wood and livestock products, inter alia. The following outline summarises the cargo likely to be transported via Lamu Port, along with the country destination/origin: i. Dry Bulk such as fertilizers, grain and coal, among others, to and from South Sudan, Ethiopia, Somalia, DRC, Uganda and Kenya; ii. Liquid Bulk such as petroleum, LNG and edible oil, crude oil, to and from South Sudan, Ethiopia, Uganda, Somalia, DRC and Kenya; iii. Export of industrial and agricultural products to and from mainly Ethiopia, Uganda and west of Kenya Based on the collected data, which was used for planning the Lamu Port and corridor facilities, it is projected that, the total dry cargo throughput at Lamu Port would be 13.5 million tonnes by 2020, and 23.9 million tonnes by 2030. 4. TRANSACTION ADVISORY SERVICES AND TECHNICAL ASSISTANCE SUPPORT

Sections 2 and 3, provide insights regarding the LAPSSET Corridor Project along with a current status core of the entire project, as a whole. NEPAD – IPPF’s funding is earmarked for Lamu Port Development specifically for transaction advisory services and technical assistance as highlighted in Section 3. The key objective of the transaction advisory services and technical assistance is to provide the necessary transactional guidance and support to the executing agency. The transaction advisory services shall help to prepare a feasible transaction plan. The transaction plan will map out all the key factors aimed at ensuring that a viable financial structure is in-place for the operation of the first three (3) Berths as well as the construction and operation of remaining twenty- nine (29) Berths at Lamu Port. The transaction advisory consultancy services are intended for ensuring full-scale due diligence (financial, legal, etc.,).

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The planned transaction advisory and allied technical assistance shall, include a number of key activities as summarized in the Logical Framework. Specific tasks/activities shall include (but not limited to) the following: i. Analysis of the market potential for the construction and operation of Lamu Port through private sector in partnership with the LAPSSET management and executing authority; ii. Assessing the financial risks for both the public and private parties that, could include retained and transferable risks, Net Present Value (NPV) of all risks and risks added into the financial structure model; iii. Designing of financial model(s), and computing the refinancing mechanisms of construction costs through Port revenue, among other identifiable ventures; Note: The ‘financial due diligence’ shall be purposed for assessing the overall feasibility of the public-private partnership (PPP) project. ‘Financial due diligence’ is also required to make comparisons of the viable alternatives, assess the different options as well as optimise the transaction structure (i.e., from a financial point of view) by making comparisons of the various PPP models with good understanding of the local/existing environment The transaction plan shall consolidate the findings of the Feasibility Report and Full-Scale due diligence (as outline above) by summarising the financial aspects together with the legal and technical aspects. The transaction plan shall map all the key factors of Lamu Port Project by defining the transaction structure, scope, project parties and their contributions, inter alia. The transaction plan will be submitted to the executing agency for endorsement, and thereafter, to the Government and the Bank for the final approval. The transaction plan will provide the necessary information on the development of the transaction documents and detail the following key subjects (i.e., purposed for informing the stakeholders): i. Definition of the scope of the project: this shall provide a summary of output specifications; a brief on the Lamu Port project and its envisaged payment mechanisms; ii. Solution options analysis: this will lay out the financial impacts, funding and affordability, technical analysis, project structure describing the relationship of the different entities and their contribution, payment mechanisms along with the calculated and consolidated costs including, the sensitivity analysis; iii. Plan and schedule: a detailed transaction schedule up to transaction closure (contract signing), definition of responsibilities during transaction implementation (appointment of steering and technical committee, etc.,) outstanding regulatory issues, consents or permits to be issued or resolved, post-bid and contract management frameworks, plus any other issues deemed relevant to the transaction implementation and ensuring the financing of the Port is within agreeable legal and financial frameworks; The transaction advisory team shall complete all the required documents to be submitted to the committee as well as assist the contracting authority to address all financial or transactional related concerns until approval. The documents shall include (but not limited to) the following: i. feasibility report and transaction plan; ii. checklist for feasibility studies of PPP projects; iii. ESIA/National Environmental Management compliance certificate; iv. land acquisition plan and social strategy frameworks i.e. resettlement and gender action plan; v. plus any other documents as required for transaction by the unit; In general, technical assistance shall be required in the preparation of the all transaction documents for the sole purposes of ensuring that the bidding process is competitive, effective and transparent. The ‘financial due diligence’ is expected to encompass, and inform on the following aspects of the transaction: i. Technical definition of the Lamu Port project and the distribution of the scope of work, among the parties;

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ii. Discussion on costs (direct and indirect) assumptions made on cost estimates; iii. Discussion of the revenue and the assumptions made on revenue estimates; iv. Discussion on all model assumptions made in the construction of the model, including, inflation rate, discount rate, depreciation and budgets, among other aspects; v. Discussion on proposed PPP type or any other as recommended financing scheme; vi. Proposed PPP or financial project structure along with the sources of finance; vii. Payment mechanisms, inter alia; Along with the ‘financial due diligence’ is the ‘legal due diligence’. The legal due diligence shall help to identify, resolve and formulate legally sound approach for the establishment of a financial model for construction and operating Lamu Port through a private sector scheme or other as recommended. Through the advisory services and technical assistance, an outline of parameters governing the financing model/scheme shall be provided based on internationally accepted standards, appropriate for the local circumstances, and within the legal and ethical frameworks acceptable to the Bank. While LCDA, as the executing agency, has the required institutional capacity with dedicated staff to undertake the monitoring and supervisory role as well as management of specific project activities, among others, specific transaction expertise remains limited. In this regard, the transaction advisory services and the scope of technical assistance will be provided to the LCDA for the development and operation of the Berths with specific focus on the financial structuring, preparation of documentation and related legal frameworks, stakeholder engagement and consultation, among others. 5. JUSTIFICATION FOR NEPAD – IPPF FUNDING

Lamu Port is a key pull factor since, its development is a much needed, and critical undertaking that, shall spur the entire implementation of the LAPSSET Corridor program. The development of the first three (3) Berths at Lamu Port will trigger the subsequent development of the other key LAPSSET Corridor project components as listed in the Summary Table. The following outlines the key justification factors for NEPAD – IPPF funding: i. The feasibility study was completed in 2011; the Environmental and Social Impact Assessment (ESIA) Study on Lamu Port was approved in 2014 by both the National Environmental Management Authority (NEMA) and Kenya Forestry Services; Resettlement Action Plan (RAP) carried out, and completed in the last quarter of 2015; ii. The LAPSSET Corridor program has received a presidential mandate; the executing authority (LCDA) in- place and running the LAPSSET Corridor program; iii. Lamu Port Development project’s ERR reveals its economic viability and potential benefits; iv. A number of agreements and MOUs in place as listed in Section 2. NEPAD – IPPF’s Grant is earmarked at facilitating the executing agency (LCDA) procure transaction advisory services (as part of the Project Consultancy Services) and technical assistance (as part of capacity building, environmental safeguards and social consultations, inter alia). The services and related technical assistance are for the sole purpose of ensuring that the Lamu Port Development Project attracts investor interest (i.e., Bankable). The significance of transaction advisory and technical assistance for Lamu Port Development is provided in Section 4 of this document. The key outcome of the transaction advisory services is to prepare a viable transaction plan that will clearly map out the key factors in relation to the development and operation of Lamu Port. The plan will define the transaction structure, scope and stakeholders along with their contributions, inter alia. The technical assistance is part of capacity building to the executing agency (LCDA), but shall solely be aimed at the preparation of the Lamu Port Development Project for Bankability. The technical assistance shall encompass ‘financial due diligence’ and related ‘legal due diligence as outline in the previous sections.

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In brief, the technical assistance shall help in the consolidation of the findings of the feasibility report, and full-scale due diligence, inter alia, all of which shall lead to a detailed project description, financial structuring (i.e., from detailed transaction schedule up to financial closure), among other related activities. The Grant is targeted at providing advisory and support until financial closure, that is, for a period of 18 months. In providing the consultancy services, emphasis shall also be keenly concentrated on ensuring knowledge transfer and capacity building of the staff. 6. KEY OBJECTIVES AND OUTCOMES

6.1 Key Objectives

Key objectives of developing Lamu Port are to provide sea port and transport corridor link to serve the ever-increasing imports, and export cargo base from Ethiopia, Kenya and South-Sudan, among other countries. In addition, the development of Lamu Port will reduce the reliance on Mombasa Port as well as enable the establishment of a transshipment port in the Eastern Region to serve as an alternative reachable port. Furthermore, the establishment of Lamu Port at the Indian Coastline at the time when the Suez Canal is being widened, will enable the new port play as a new hub centre. Countries such as, Ethiopia (with a population of over, 94 million people) and South Sudan (with a population of about 12.5 million people) have huge hinterland markets that require access to the sea. Notably, the southern part of Ethiopia is a very productive agricultural region, and the Southern part of South Sudan has oil reserves, as well as exhibits enormous potential in agriculture and manufacturing sectors. The completion of Lamu Port will enhance the transshipment of such country based cargo as exports while aligning as an import-handling port for the same specific countries, among others. The key objectives of the transaction advisory services and technical assistance are detailed in Section 4. Overall, the transaction advisory services will map out all the essential factors of the financing strategy, including an assembly/information on the legal, technical, project structure and scope, mechanism of transaction/refinance, among others. This undertaking of the consultancy activities shall also include (but not limited to), offering technical assistance during the entire financial structuring process till closure. 6.2 Key Outcomes

Key outcomes attributed to the completion of the Lamu Port project are detailed in the previous sections of this document. Key outcomes allied to transaction advisory services and related technical assistance include, the development of transaction plan (along with the transaction documents), support during the bidding process and evaluation (along with the preparation and coordination of the entire process) within acceptable legal, financial and technical frameworks, among others. Specific, tangible outcomes following the successful transaction advisory and technical assistance include (but not limited to): i. Transaction documents required for an effective, competitive and transparent bidding process and related support for ensuring accurate bidding criteria; ii. Drafting of the Terms of Reference (TORs) for procurement and technical guidance in terms of identifying and defining the bidding strategy, inter alia; iii. Securing investors for the operation of the three (3) Berths and construction as well as operation of the reminder twenty-nine (29) Berths;

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7. RISKS AND MITIGATION

Reference is made to the Logical Framework regarding the risks and mitigations. However, the key risk is obtaining competent experts knowledgeable in Sea Port transaction precisely, with Technical Specialty in East African procurement and financial laws along with setting up viable financing scheme/criteria/plans. For instance, the experts and/or the consultancy firm must have staff with good understanding of the legal frameworks under which the specifics, such as, the legal, financial and ethical, among others, are acceptable regarding financing the construction as well as operating of Sea Ports. As a mitigation measure, the Bank will monitor the evaluation process in terms of the consultancy firm’s competence and/or Key Experts’ experience and expertise in delivering the project outcomes. The monitoring and evaluation is aimed at ensuring the project deliverables are of the required quality, and entire project objectives are fulfilled. Note: Bank maintains the right to provide its final approval following the evaluation of the consultancy firm and/or consultants. Equally the Bank maintains the right to review and comment the on the quality of the deliverables specified under this project. 8. IMPLEMENTATION STRATEGY

The transaction advisory services along with the technical assistance are planned for a duration of 18 months, anticipated to commence, December 1, 2016. The initial phase of the services shall concentrate on consolidating the findings of the feasibility study, and conducting a full-scale due diligence; this is aimed at ascertaining key factors, and formulating a detailed project description, among other relevant aspects. The next phase of the services shall encompass the preparation of solution options and analysis. Following these undertakings, a detailed transaction plan, along with the schedule-up to transaction closure, shall be prepared. Technical assistance in terms of development of transaction documents and activities during the transaction process shall be provided. The executing agency (LCDA) will procure the transaction advisory from a reputable consultancy firm or select a team of competent experts following the Bank’s procurement Rules and Procedures as detailed in Section 12 of this document. The Bank shall ensure that, the implementation of the services by the consultancy firm and/or Experts are undertaken in accordance with the Bank’s Rules and Procedures for Procurement of Goods and Works as well as Rules and Procedures for Use of Consultants. Furthermore, periodic reports shall be submitted to inform the Bank on the project progress and regarding specific activities, along with the quality of the procured services and related technical assistance. The implementation schedule of the services and technical assistance shall be for 18 months, as summarised below: i. Phase I - comprehensive review of the project feasibility study; financial due diligence; legal due diligence; market sounding; solution options analysis; definition of the scope of the project; and the overall feasibility assessment plus related activities; ii. Phase II - transaction plan and schedule; technical assistance to contracting authority on securing PPP approval committee and all other approvals; iii. Phase III – development of transaction documents; bid process design and bid documents; Technical Assistance during the bidding process and evaluation; Technical Assistance till financial closure of project;

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9. ENVIRONMENTAL, SOCIAL AND GENDER STRATEGY

9.1 Environmental and Social Management Assessment

Although an environmental and social study for the Lamu Port Site was completed in 2014, and received the approval of both the National Environmental Management Authority (NEMA) and the Kenya Forestry Services (KFS), a sustained review and assessment of any potential risks remains vital. Such review and related assessment of potential risks include (but not limited to) any potential environmental and social issues or risk, among others. It is strongly recommended that keen focus should be drawn on the existing environment and social conditions, guidance on policy or strategy in addition to the institutional frameworks relevant to the safeguard of the environment; this also refers to the review of potential climate change implications. Additionally, a comprehensive stakeholder engagement and related consultation, as part of the project preparation activities, has been included under the required technical assistance to the executing agency. Note: It is recommended that an assessment and review of the environment and social aspects be continuously maintained in order to mitigate any potential risks and concerns such as those of civil society organisations, inter alia. 9.2 Gender and Social Equality

As part of the technical assistance, a social development and gender specialist who has been secured under the entire LAPSSET Project shall be availed for the specific purposes of addressing any social and gender issues. In doing so, the social and gender specialist shall assess the project, provide guidance and make recommendations on how to strengthen the gender and social aspects. 10. PROJECT BANKABILITY

Section 3.1 provides the implementation plan of the entire Lamu Port Development Project. The transaction advisory services are aimed at the preparation of a transaction plan and related documentations for the purposes of mapping out all the key project factors with respect to transaction structure and scope, defining project parties and their contributions, the allocation of revenue and related risks, defining of legal-financial frameworks, among other aspects. The technical assistance to the executing agency including facilitating investor interactions and in ensuring the project is bankable. The transaction advisory services and technical assistance as identified for NEPAD – IPPF funding are specifically targeted at the preparation of the Lamu Port for bankability stage where it can attract private sector investors for operation and construction. Both transaction advisory and the technical assistance are instrumental and aim at preparing the required documentation, financial structure along with the related project specifics as well as the legal- financial frameworks for project bankability. 11. COST AND FINANCING

The total planned cost for project preparation activities of the entire LAPSSET Corridor project is US $ 5,623,430 (five million, six hundred and twenty-three thousands, four hundred and thirty United States dollars only). As part of the project preparation phase is transaction advisory services and related technical assistance for the development of Lamu Port which are valued at US $ 2,141,590.

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Tables 1 and 2 provide a summary of the financial plan, costing and components with specifics. NEPAD – IPPF will contribute US $ 1,936,560, which is approximately 90% of the project cost. The government of Kenya will contribute US $ 205,030, an amount that includes the NEPAD-IPPF Grant cash counter contribution of 10% of the total project cost, administrative expenses and related costs. Table 1. LAPSSET Corridor Project Financing Plan TOTAL COST OF MAJOR COMPONENT OF LAPSSET CORRIDOR PROGRAM COMPONENT (US $) Cost of the Consultancy Services (including, Transaction Consultancy Services) 4,015,650 Task Team Supervision Cost 343,330 Dissemination Costs 66,500 Logistics (Workshops, etc.) 228,000 Project Administration (Staff, Operations, Flights, Travel, Office Equipment, etc.) 969,950 Total Financing/Costs 5,623,430

Table 2. Phase 1: Transaction Advisory and Technical Assistance Cost Breakdown

BUDGET FOR TRANSACTION ADVISORY AND TECHNICAL ASSISTANCE (PHASE I - LAMU PORT DEVELOPMENT PROJECT) NEPAD – IPPF Other Sources of Finance Total Cost Component (US $) US $ Source (US $) Component 1: Transaction Advisory Services 1,345,890 - GoK 1,345,890 Component 2: Technical Assistance1 560,670 - - 560,670 Administrative Expenses - 205,030 GoK 205,030 Contingency (Project Audit, etc.) 30,000 - - 30,000 Total Financing/Costs for 1,936,560 205,030 2,141,590 Transaction Advisory & TA Total Contribution (%) 90% 10% 100% 1BREAKDOWN OF COMPONENT 2: TECHNICAL ASSISTANCE Components for Technical Assistance Total Cost (US $) Short-Term Individual Consultants 335,000 Technical Steering Committees/Stakeholder Engagement and Consultations 135,670 Workshops/Round-Table Meetings/Investor Forums 90,000 NEPAD – IPPF Sub-Total Cost for Component 2: Technical Assistance (26%)1 560,670

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12. PROCUREMENT AND DISBURSEMENTS

12.1 Procurement Arrangements

Procurement of all goods, works and acquisition of consulting services financed by the Bank will be in accordance with the “Procurement Policy for Bank Group Funded Operations”, dated October 2015 and following the provisions stated in the Financing Agreement. All procurement will be carried out following Bank Procurement Methods and Procedures, using the relevant Bank Standard or Model Solicitation Documents, for all contracts. The Borrower Procurement System under the Public Procurement and Asset Disposal Act of 2015, shall not be relied upon for any category of procurement under the program. Third Party Procurement Methods and Procedures shall not be used. The various items under different expenditure category are described below. Each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior-review requirements, and time frame are agreed between the Borrower and the Bank project team will be provided in the Procurement Plan (see, Section B.5.5). Table 3: Summary of Procurement Arrangements

USD (US $)

Project Categories Use of NPP Use of Bank’s Non- Bank- Total or CPS procedures Funded

Consulting Services [N/A ] - - - Transaction Advisory Services [N/A ] 1,345,890 - 1,345,890 Technical Assistance [N/A ] 560,670 - 560,670 Administrative Expenses [N/A ] - 205,030 205,030 Contingency (Project Audit, etc.) 30,000 - 30,000 TOTAL N/A 1,936,560 205,030 2,141,590

Consulting Services: Contracts for Transaction Advisory Services along with the allied Technical Assistance will be awarded using Quality and Cost Based Selection method (QCBS) while contract for Project Audit will be procured using Least Cost Selection (LCS). When the amount of the contract is less than UA 200,000, the Borrower may limit the publication of a Specific Procurement Notice (SPN) requesting for expressions of interest to national or regional newspapers. However, any eligible consultant, being regional or not, may express his desire to be short-listed. General Procurement Notice: LCDA shall prepare the text of a General Procurement Notice (GPN) and it will be issued for publication in UNDB online and in the Bank’s Internet Website, upon approval of the Financing Proposal by the Bank. Procurement Plan: The Borrower shall develop a Procurement Plan for project implementation, which shall provide the basis for procurement activities. This Procurement Plan will be updated by the Borrower’s Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Any revisions proposed to the Procurement Plan shall be submitted to the Bank prior no objection. The Borrower shall implement the Procurement Plan in the manner in which it has been agreed with the Bank.

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12.2 Disbursement of Funds

All payments shall be made in accordance with the procedures provided in the Bank’s Disbursement Handbook. The funds shall be disbursed once a confirmed copy of the contract has been furnished to the Bank, and upon verification and certification of the invoices. Payment shall be made in United States Dollars (US $). However, the Bank reserves the right to conduct any post review of such documents, at any time before or after the first disbursement. Disbursement will be done using two methods (i.e., Direct Payment Method and Special Account) shown in Table 4. Disbursements of the proceeds of Financing shall be made upon LCDA’s request. Supporting evidence that, the funds are used in accordance with the terms of the Financing Agreement and/or the Procurement Plan shall be submitted to the Bank, along with, LCDA’s disbursement application. Table 4: Disbursement of Funds (Direct Method) and Special Account

Disbursement Method Source of Funding Total Direct Method Special Account NEPAD – IPPF 1,936,560 - 1,936,560 Government of Kenya (GoK) - 205,030 205,0303 TOTAL 1,936,560 205,030 2,141,590

13. FINANCIAL MANAGEMENT, MONITORING AND REPORTING

During the implementation period, the LCDA will monitor the technical and financial aspects of the project. LCDA will prepare and forward to the Bank Quarterly Progress Reports that will include: i. Interim Financial Statement; ii. highlight on the status of project activities, disbursements made and anticipated, problems encountered and proposed solutions; The reports shall be shared with the Bank on a quarterly basis. The 1st Quarterly Report will be sent to the Bank three (3) months following the commencement of the consultancy work. The Bank will monitor the implementation of the transaction advisory and technical assistance through the review of key outputs and regular supervision missions at least once yearly. At the end of the implementation phase, LCDA will prepare and submit to the Bank and the NEPAD-IPPF a joint Project Completion Report (PCR) in line with the Bank format. The Bank and NEPAD-IPPF will use the report as a background document for preparing their own completion report. After completion of the services and technical assistance, a Grant Audit will be conducted by the Office of the Auditor General (or his appointee using the audit TOR’s on the Bank financed projects) with the complete audit submitted to the Bank within six (6) months of the end of the financial year. The complete audit will include signed financial statements, management letter and related responses. The executing agency will have the overall responsibility of monitoring, and of reviewing the progress reports. However, the Bank maintains the right to assess the suitability and quality of the consultancy services (i.e., transaction advisory services) and Technical Assistance. From time to time, the executing agency (LCDA) will furnish the Bank on the progress of the consultancy services and technical assistance.

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For reporting, the following shall be expected as deliverables: i. A summary, as part of the progress report, details related to; how the proposed financial model addresses the Authority’s strategic objectives; output specifications (i.e. the terms and conditions); payment mechanisms; Financial impacts; funding and affordability; project risks (risk matrix) and overall solutions options analysis; ii. A detailed transaction plan and schedule (from financial inception up to financial closure – contract signing) iii. All necessary transaction documents along with a detailed bid strategy, TORs and draft Agreements, among others, as required for an effective, legal and financial binding transaction undertaking It is noteworthy that, the technical assistance shall be provided until financial closure. The contract shall be deemed as complete following the submission of the deliverables. 14. CONCLUSIONS AND RECOMMENDATIONS

Completion of Lamu Port Development project will spur the entire LAPSSET Project. In summary, the NEPAD – IPPF Grant will: i. enable the executing agency procure transaction advisory services, as part of the consultancy services specifically, laying out a transaction plan for Lamu Port Development; ii. technical assistance will help realise specific activities related to Port Development as detailed in the Table 2; The transaction plan will map-out the key factors of the project, defining the transaction structure, scope and volume of the entire project; thus becoming bankable and attract investors’ interest. This will enable the Project Completion of Lamu Port will help kick-start the development of other LAPSSET Corridor Project. The significance of the transaction advisory and technical assistance for the development of Lamu Port’s 32 Berths and related facilities will expand the import/export cargo. This Grant is in line with the three key strategic project components for project preparation activities. It is recommended to the Bank that, a Grant, not exceeding US $ 1,936,560 (One Million, Nine Hundred and Thirty-Six Thousand, Five Hundred and Sixty, United States, Dollars Only) be approved.

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APPENDIX – A1 LAPSSET Corridor Projects and Regional Integration

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APPENDIX – A2 Land Usage Plan for Lamu Port Development

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APPENDIX – A3 Architectural View of Proposed Three Berths at Lamu Port

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APPENDIX – A4 Terms of Reference

Blank Page See NEXT Page for Terms of Reference

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THE PRESIDENCY LAPSSET CORRIDOR DEVELOPMENT AUTHORITY

TERMS OF REFERENCE FOR REQUEST FOR PROPOSALS

FOR

CONSULTANCY TO PROVIDE TRANSACTION ADVISORY SERVICES FOR THE DEVELOPMENT, OPERATION, AND MAINTENANCE OF THE 1ST TEN BERTHS OF THE LAMU PORT PPP PROJECT

IMPLEMENTING AGENCY – LAPSSET CORRIDOR DEVELOPMENT AUTHORITY AND PROPOSED LAMU PORT DEVELOPMENT CORPORATION

OCTOBER 2015

Building Africa’s Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya.

SELECTION OF CONSULTANTS

REQUEST FOR PROPOSALS

RFP No.: LCDA/LPDC-SPV/001/2015-16

SELECTION OF CONSULTING SERVICES FOR: CONSULTANCY TO PROVIDE TRANSACTION ADVISORY SERVICES FOR THE DEVELOPMENT, OPERATION, AND MAINTENANCE OF THE 1ST TEN BERTHS OF THE LAMU PORT PPP PROJECT

Client: LAPSSET CORRIDOR DEVELOPMENT AUTHORITY

Country: Kenya

Issued on: 2015

Building Africa’s Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya. i

TERMS OF REFERENCE

PROJECT DESCRIPTION

The Lamu Port South – Sudan Ethiopia Transport (LAPSSET) Corridor Project is the single largest, Integrated, Transformative, and Game-Changer infrastructure Project in Africa. The Project focuses on inter-connecting the East African countries of Kenya, Ethiopia, South Sudan, and Uganda amongst others. Kenya is spearheading the implementation of this Project to strengthen the position of East Africa as a continental gateway and transport and logistics hub in the region to facilitate trade, promote regional economic integration and interconnectivity between African countries. The LAPSSET Corridor Project components are the following:

a. Lamu Port with 32 Deep sea berths at Manda Bay, b. Standard gauge railway lines from Lamu to Isiolo, Isiolo to South Sudan and Uganda, Isiolo to Ethiopia and to Isiolo; c. Highway from Lamu to Isiolo, Isiolo to Nadapal/Nakodok (South Sudan), Lokichar/Hoima (Uganda), and Isiolo to - Addis Ababa (Ethiopia); d. Crude Oil Pipeline from Lamu to Isiolo - Nadapal/Nakodok (South Sudan), Lokichar/Hoima(Uganda) and Product Oil Pipeline from Lamu to Isiolo - Moyale - Addis Ababa (Ethiopia); e. International Airports at Lamu, Isiolo, and Lake Turkana; f. Resort Cities at Lamu, Isiolo and Lake Turkana; g. Merchant Oil Refinery at Lamu;

In Kenya, the LAPSSET Corridor Project actualizes recent policy and institutional reforms and Vision 2030 strategy as critical infrastructure for spurring growth, providing an alternative transport corridor and offering a platform for opening up the vast interior part of Africa including the northern parts of Kenya, consisting of over 70% of the country’s land mass which to date remains unexplored. The project is also intended to attract Foreign Direct Investment (FDI) especially given the recent discoveries of oil, gas, rare minerals and coal in East Africa where the Corridor passes.

The LAPSSET Corridor has 2 elements; the Infrastructure Corridor of 500 m wide where the road, railway pipelines, power transmission and other projects will be carried and the Economic Corridor of 50 km on either sides of the infrastructure corridor where industrial investments will be situated.

Building Africa’s’ Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya. 2

The LAPSSET Corridor Project studies were started in 2008 and completed in 2011. The project components have shown great economic viability with most of the project components registering High Economic Internal Rates of Return of between 17% and 23.4% compared to acceptable industry minimum standard of 10% for infrastructure projects. Four out of the seven components have shown between 20% and 23% Economic Interest Rate of Return: Lamu Port 23%, Crude Oil Pipeline 21.6%, Airports and Resort Cities 20% each

The seven key infrastructure project components of the LAPSSET Corridor Program require substantial amounts of resources to implement with a budget estimate of over US$ 24.5 Billion, equivalent to over Kshs. 2.4 Trillion at current exchange rates in construction costs. It is estimated that the first 20 berths of the Lamu Port alone will cost approximately US$ 3.5 Billion, the Railway US$ 7.1 Billion while the Crude oil pipeline is estimated to cost US$ 4.8 Billion.

1. CURRENT STATUS OF IMPLEMENTATION OF LAPSSET CORRIDOR PROJECTS

The LAPSSET Transport Corridor Project is the latest addition to the Presidential Infrastructure Championship Initiative (PICI) Project list. It was endorsed as a PICI project during the African Union (AU) Heads of State and Government Orientation Committee (HSGOC) meeting at the AU Summit in Johannesburg, South Africa in June, 2015.

The admission of LAPSSET into the PICI gives the project the continental institutional and leadership approval and recognition which in turn strengthen investor confidence in the Project. The recognition also strengthens the prioritization of LAPSSET Corridor Program in the government development agenda and regional and continental infrastructure investment plan.

1.1 Lamu Port i. The government undertook ground breaking for the LAPSSET Corridor Program at Lamu Port site on 2nd March 2012, after which it commenced construction of various preliminary infrastructural facilities and services at Lamu Port Site. ii. Detailed engineering studies have been undertaken for the 1st 3 berths of Lamu Port. iii. A Contractor and Supervision Consulting Engineers have been procured for the construction of the 1st 3 berths of Lamu Port at an estimated cost of Kshs 42 Billion. iv. The contract for the 1st 3 Berths of Lamu Port Project was signed on 1st August, 2014. v. The contractor has already been mobilized to commence construction of the Port. The construction of the 1st 3 berths will take five years to complete, by 2019

Building Africa’s’ Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya. 3

vi. The 1st 3 Berths will take 5 years to deliver. The 1st three Berths to be constructed to attract Private Sector Investors for Port Operations and construction of the remaining 29 Berths. vii. The Government will concession the 1st 3 Berths to Private Sector for operations. The remaining 29 Berths will be concessioned to the Private Sector for construction and operation. viii. It is expected that the Port will handle 23 million tons per year by 2030. The Port has an EIRR of 23.1%. ix. The facilities whose construction have been completed at Lamu Port include LAPSSET Plaza which is the Port headquarters, Police Station, Electric Power Connection to the National Grid and Water Supply

1.2 Roads i. Significant progress has been made on the ongoing construction of LAPSSET Highway component, particularly the 505km Isiolo-Moyale on Kenya side and Moyale - Hawassa on Ethiopia side. ii. The project is funded jointly by the African Development Bank, European Union, the Government of Kenya, and Ethiopian Government. iii. Construction of 1005 Km of road will be completed by 2016. iv. A One Stop border facility is being built between Partner States along the road corridor. v. The Government of Kenya and the Government of South Sudan, working together with the World Bank recently completed feasibility studies and detailed engineering designs for the Lokichar - Nadapal – Torit - Juba Road. vi. The World Bank has approved a credit of US$500Million for the construction of Lokichar – – Nakodok (at border with South Sudan) Road. The process for the Selection of Supervision Consultants is currently ongoing while selection of Contractors will commence within the year. vii. The road project is currently at syndication of finances for construction. viii. Delivery of the road provides immediate road connection between Lamu Port and Juba and Addis Ababa. ix. The African Development Bank (AfDB) is currently financing the ongoing detailed engineering design of Lamu--Isiolo-Nginyang (860km) Road which is expected to be completed by the end of 2015. The construction of this section is expected to be completed by 2020. x. The Government of Kenya has separately signed bilateral Road and Transport Agreements with the Government of Ethiopia and Government of South Sudan to facilitate development of the roads as regional infrastructure.

Building Africa’s’ Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya. 4

1.3 Crude Oil Pipeline i. Feasibility studies on the Crude Oil Pipeline indicate that it has Economic internal rate of return of 21.6%. ii. The governments of Kenya, Uganda and Rwanda in October 2014 engaged a consultant who has completed undertaking Preliminary Engineering and feasibility studies on the LAPSSET Corridor Crude Oil Pipeline. iii. The feasibility study and preliminary engineering design of crude oil pipeline between Hoima -Lokichar and Lamu was completed in June 2015. iv. Already the government of Kenya has signed a Memorandum of Understanding and is currently negotiating an Inter-governmental Agreement (IGA) with the Government of South Sudan. v. An Intergovernmental Agreement has been signed with the Government of Uganda. The construction of the crude oil pipeline is expected to be completed by the year 2018.

1.4 Railways i. The Governments of Kenya, Ethiopia and South Sudan are planning to construct Lamu – Isiolo – Nginyang – Lokichar – Nakodok (1250 Km) and Isiolo – - Moyale (470Km) Railway Project Component under the LAPSSET Corridor Project. ii. The Government of the Republic of Kenya and the Government of the Federal Republic of Ethiopia have recently completed preliminary Engineering and feasibility studies on the proposed project lines. iii. The Government of Kenya and the Government of the Federal Republic of Ethiopia have signed a Bilateral Agreement and established a Joint Railways Co-ordination for the delivery of the Project between the two Partner States.

1.5 Airports i. The Government is enhancing the , Manda and Isiolo airports to improve the facilities and augment accessibility to the corridor. ii. The government has completed the extension of runway from 1.1km to 2.3 km, and the improvement of Manda terminal building. iii. Plans are underway to construct a parallel taxiway and aircraft apron to boost the capability of the Manda airport. iv. Construction of the 2.3km runway is complete. v. Construction of the terminal building is in progress and will be complete by end of 2015. vi. Improvement works on have been completed. vii. Kenya Civil Aviation Authority is in the planning stage to establish air transport safety, security, and surveillance facilities to enhance transport logistics in the airports.

1.6 Resort Cities

Building Africa’s’ Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya. 5 i. Master planning to facilitate development of the resort cities is in progress.

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1.7 Preparing the Corridor for Investments

i. LAPSSET Corridor Security Master Plan: The LAPSSET Corridor Development Authority together with all Security Agencies of Government has completed preparing a Security Master Plan for the Corridor to comprehensively address all security concerns along the Northern Corridor.

ii. LAPSSET Corridor Land Acquisition: Ground surveying of the LAPSSET Road Corridor is currently ongoing and the Authority is ready to commence surveying and setting apart of land for Pipeline and Railways once ground details are provided at completion of design by design teams to facilitate wayleave acquisition for all components.

iii. Stakeholder Engagement: The LAPSSET Corridor Development Authority is currently undertaking consultative discussions with county governments to prepare ground for wayleave acquisition for pipeline, Road and Railway.

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DEVELOPMENT OF THE LAMU PORT

The implementation and the development of Lamu Port component will trigger the development of the other components of the LAPSSET Program. The Port Master Plan will be implemented in three phases namely:

(i) Short Term Development Plan (to be completed by 2019) (ii) Medium Term Development Plan (to be completed by 2030) (iii) Long Term Development Plan (to be completed by 2045)

The development of Lamu Port will also include the construction of port associated infrastructure such as Causeway, port access road, railway yard, water and electricity supply, port building, and other port related services.

Objective of Developing the Lamu Port

The objective of developing Lamu Port is to provide a second sea port and transport corridor gateway link to serve the expanding import and export cargo base including the new hinterlands of northern Kenya, South Sudan, and Ethiopia and as well reduce over-reliance on one Port (Mombasa Port) and one Transport Corridor (The Northern Transport Corridor).

Development of the Port of Lamu will enable the country to establish the only Transshipment port in the Eastern and Southern Africa after Port Durban. The establishment of a transshipment port at Lamu Port at the Indian Ocean Coastline at a time when the Suez Canal is being widened will enable the new port to play the role of a transshipment port to serve the eastern and Southern Africa region, thus creating a new hub character in the Kenyan economy.

Justification for the Lamu Port

It is long standing that Kenya is the principal gateway to the region, not only serving countries such as Uganda, Rwanda, Burundi, Democratic Republic of Congo (DRC) but also Ethiopia and Southern Sudan. Ethiopia alone with a population of close to 90 million people, not to mention the population of the New State of South Sudan, is huge hinterland markets that require access to sea. The Southern part of Ethiopia is a very productive agricultural area while the South Sudan is rich in crude oil production with enormous potential in the agricultural and manufacturing sectors.

In addition, the combined population of the North-Eastern, Eastern, Rift Valley and a part of Coastal regions of Kenya is around 15.0 million and it accounts for around 40% of the total population of Kenya covering over half of the country’s land space. These regions have remained as economically under-developed for many years and will be served by the new Corridor. The major economic activities in these areas include pastoralism and some agriculture where pastoralism involves keeping of cattle, goats, sheep and camels and donkeys. The development of LAPSSET Corridor will open up the region for investment, job creation, and productive sectors of the regional economy.

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Given that the Port of Mombasa is already developed to nearly its full capacity, it was realized that it cannot therefore sustain the growing need for access brought about by the heavy demands of South Sudan and Ethiopia, needless to mention the fast growing economies of Kenya, Uganda, Rwanda, Burundi, eastern Democratic Republic of Congo (DRC) and Northern which are current users of the Port of Mombasa.

The Lamu Port will complement the Port of Mombasa and is therefore expected to reduce congestion at the Port of Mombasa, improve operations, enhance service delivery, and improve inter-regional trade for the importers and exporters from Ethiopia, South Sudan, Kenya, and Uganda.

The Manda Bay is well sheltered and has deep waters of around 18m along main channel and 5m to 60m in the Bay and therefore can accommodate any post Panamax vessel. The development of twenty one (21) berths by 2030 and up to a total of thirty two (32) berths Lamu Port at Manda Bay beyond 2030 on 6,000 to 9,000 quay length is feasible.

Lamu Port is the key pull factor for all the LAPSSET Corridor project components hence its development is critical to spur and give meaning to development of the rest of the components. It is therefore proposed that the government of Kenya take a leading role by funding the construction of the port of Lamu so as to give confidence to private investors to take part in the development of the other components of the LAPSSET Corridor Project.

It is anticipated that development of the first three berths and the Garsen-Lamu Road will trigger the subsequent development of all the other critical systems such as the main highway, oil pipeline and the railway which feeds into and out of the Port.

The Plan for the Port

The Lamu Port coastline is deep and well sheltered. The Channel and basin plan is prepared with depths of 18.0m (bottom width of 500m) at Main Channel, 12.5m (310m) at Sub-channel, 17.5m (500m) at Manda Pass, and 17.5m (400m) at the basin of Bulk Berth, 16.0m (400m) at Container Berth, and 12.0m (400m) at General Cargo Berths. It is estimated that the total cargo throughput of New Lamu Port will be about 13.5 million tonnes per year in 2020 and 23.9 million tonnes in 2030, respectively. The latter volume is almost twice as large of present total cargo throughput of Mombasa Port.

The design ships are defined in consideration of shipping and ship building trends in the world e.g. bulk carrier of 100,000 Deadweight tonnage (DWT) -class, container ship of 100,000 DWT and general cargo ship of 30,000 DWT-class.

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(i) The Short-term Development Plan running up to 2019 has been proposed. It includes three urgently required berths, referred to as the Urgent Development Plan. This plan contains one each, for bulk, container and general cargo berths, and associated infrastructure. They are called the first three berths.

(ii) The Medium-term Development Plan to be completed by 2030 will see the port grow to a total of twenty one (21) berths on the west coast of Manda Bay, comprising four (4) bulk berths, six (6) container berths, ten (10) general cargo berths and one (1) edible oil berth. On one (1) product oil berth, one (1) coal berth and one (1) LNG berth will be located. Two (2) Single Point Mooring Buoys (SPMBs) will be located on Pate Island and off-shore. By that time, the Manda Navy Base is expected to have been relocated out of Manda Bay, as proposed.

(iii) The Long-term Development Plan running through to 2045 will see the construction of Berths 22-32. The specializations of these berths will be determined by the demand for each specific cargo type as the port grows with time.

Other developments in addition to the Port is a new port city associated with the port referred to as Lamu Metropolis, comprising of port related industrial area and urban area, a resort city linked with five satellite tourism sites, an international airport, and two electric power stations. Parallel to the development of LAPPSET Corridor and Lamu Port, the Lamu Metropolis and resort city are expected to grow tremendously in the future. The population of this city is projected to increase to about 1.25 million.

The Economic Viability of the Port

The demand forecast for freight and passengers has been prepared based on year 2020 and in 2030, as per the information and data collected for planning the Lamu Port and the corridor facilities (see attached copy of Economic Analysis and Data). Initial studies projected that the total dry cargo throughput at Lamu port would be 13.5 million tonnes in 2020 and 23.9 million tonnes in 2030, respectively, which is larger than the present cargo throughput at Mombasa Port.

As regards the modal split by transport mode, types of commodities, transport distance and other factors, the share of freight volume by railway, highway and pipeline was estimated. The freight share of railway, excluding crude oil, in 2020, is estimated to be 96.1% of total freight at the Southern Sudan-Isiolo section, 93.2% at Ethiopia-Isiolo section, 94.3% at Isiolo-Garissa section, and 60.2% at Garissa-Lamu Section. Figure S-6 illustrates the changes of freight transport volume by route, transport mode and target year.

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Fig 1: Skeletal Diagram for Freight Demand Forecast By Segment Transport Mode

Major import cargo handled by the Lamu Port would be bulk and break-bulk cargo such as grain, steel and transport equipment, while the export cargo would be processed agriculture products and primary industrial products such as processed wood as well as livestock products. Around 75% of the total cargo volume handled by the Lamu Port will be the cargo imported by and exported from Ethiopia and Southern Sudan. A part of cargo transported by the Northern Corridor will be diversified to the Lamu Port as well due to limited capacity at the Port of Mombasa.

On the other hand, air passenger demand is also projected for Lamu, Isiolo and Lokichokio. In 2030, Lamu airport is expected to receive 600,000 arrivals per annum. A certain number of railway passengers on the Corridor trains are also expected, especially after the tourism corridor will have been fully developed.

Passengers traveling between Nairobi and Isiolo by cars and buses are projected to be more than 7 million persons per year in 2030. It is estimated that by the year 2030, there will be a road passenger traffic volume of 700,000 between Nairobi and Lamu through Garissa. According to the demand forecast and other data available the economic analysis carried showed that the Lamu Port is a viable venture with an EIRR of 23.4%.

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INTRODUCTION TO SCOPE OF SERVICES

The main objective of the consultancy is the Provision of Transaction Advisory Services for the LAPSSET Corridor Program, specifically for the 1st Ten (10) Berths of the Port at Manda Bay, Lamu: LAPSSET/01.

The Program is a complex, large scale, cross sectorial infrastructure development that encompasses the implementation of the above mentioned sub projects, and the respective service supports required. Studies undertaken by the Government of Kenya suggest that the eight sub components of the project are economically viable given internal rates of return of between12.9% and 23.4% compared to a global industry minimum standard of 10% for similar infrastructure development projects, and that the project will cost an estimated US$26 billion.

Given the formation of the Public Private Partnership Policy, and the respective efficiencies and economies of scale that can be capitalized from it, The Authority has proposed the use of a private sector led framework for the implementation of the sub projects. Not only would this make the overall project more viable from a development and operational perspective, but also allow for less impact on public funds. The Authority therefore advises the proposing transaction advisor(s) to consider the need to structure the project(s), its financial arrangement(s), and operation(s) through private sector participation.

In consideration of the above, the Scope of Work for the Transaction Advisor would be structures into three specific Phases as follows:

PHASE I: Feasibility Review and Due Diligence

The Government of Kenya has envisaged the development of 32 berths at the Port at Manda Bay and has independently begun the development of the first three berths. The Government will engage the private sector to develop the additional 29 berths.

A feasibility study has already been undertaken and has provided evidence that the port has a potential economic internal rate of return of 23.4% and is therefore viable for private sector investment.

Current Project Status

Construction for the three berths to be funded by the Government of Kenya is scheduled to commence within the first half of 2015. The Government has so far allocated approximately Kshs. 4.5 Billion in preparation for the commencement of construction works for the first three berths.

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The tender for the construction of the first three berths was awarded to MS China Communication Construction Company. The first three berths are estimated to cost Kshs 41 billion of which Kshs. 4.5 billion has been provided by the Government for mobilization.

A feasibility study for the port at Manda Bay was conducted in 2011. It is noted however that a number of shifts in the operating environment have occurred since the feasibility was prepared including the recent oil discoveries in Kenya among other variables. In this regard, the transaction advisor is required to undertake a comprehensive review of the feasibility study report of the project for comprehensiveness and to take into account these recent shifts in the operating environment.

The revised report will meet international best practice and Kenyan law (including the PPP Law). The review of the feasibility study needs to clearly demonstrate the partnership model options the Authority can pursue and associated cost per model and propose the optimal PPP solution for the Authority to achieve its desired outcomes.

Task 1.1 - Comprehensive Review of Project Feasibility Study

As a first step, the consultant is expected to undertake a comprehensive review of the current feasibility study including but not limited to the following:

 Review of the feasibility report and aligning it to the various changes in the operating environment which may not have been provided for including but not limited to the recent oil and gas discoveries in Kenya and Uganda, etc.  Review of the technical options considered in the feasibility report including berth type, size, design etc.  Review of the Market Analysis – Economic aspects of the target markets: demand projections for the length of the project period; alternative options to meet the projected demand; the competitiveness of the Project vis-à-vis other regional ports, Mombasa Port; the share of the Project in meeting trade demand.  Review of the Project Level Analysis - Project cost-benefit analysis, including net present value (NPV), financial internal rate of return (FIRR) and economic internal rate of return (EIRR).  Review of any project assumptions and whether they are practically and legally viable  Review the financial models used and assumptions made.  Review of costs (direct and indirect) and assumptions made on cost estimates  Review of revenues and assumptions made on revenue estimates  Review of the macroeconomic impact of the project and all assumptions including analyzing: o revenues that would accrue to the Central and County Government through: . Value-Added Taxes;

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. other taxes and levies as contributions to specific funds (e.g.- Social Fund); . Corporate taxes; . County taxes; . Customs Duties and Excise Levies on equipment and services imported/ purchased; . Guarantee/on-lending margins charged by Government; o impact on Governments overall debt and debt service position; o employment generation o regional development o reduction in demurrage due to faster offloading and loading of containers o reduction in carbon footprint due to faster turnaround time for ships andoil tankers calling at the port of Mombasa o betterment of people directly affected etc; o transformation of Lamu into a regional trading and logistics hub  Review of proposed partnership project structure  Discussion on all model assumptions made in the construction of the model, including inflation rate, discount rate, depreciation, tax and Value Added Tax (VAT)  Review of the Environmental Strategic Impact Assessment (ESIA) scoping study (if applicable)

The reviewed and revised feasibility study, comprising all the above deliverables, will be compiled in a single report in Word format (with relevant annexures), and delivered as both electronic and hard copy documents. All financial models will be in Excel format, and will clearly set out all assumptions made, sensitivity analyses carried out, and model outputs.

The financial models will be sufficiently adaptable for use by others at later stages. The revised feasibility study will be presented with a thorough executive summary and will be accompanied by a PowerPoint presentation that encapsulates all the key features of the review. The executive summary and PowerPoint presentation will be compiled in such a manner that they can be used by the Corporation’s management for decision-making purposes.

It is expected that some of the deliverables for this Task 1.1 will be similar to or will be a build up to the deliverables for Tasks 1.2 to 1.6.

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Task 1.1.1–Technical Support to the Government of Kenya on Current Development of Berths 1 – 10

The Transactional Advisor (TA) will be required to provide technical support to the Government of Kenya on the current development of Berths one (1) through ten (10). This support is envisaged to ensure that uniformity is ensured through the development and operation of all berths and the port as a whole. This Technical Support will include insurance of design specifications and operations specifications. The TA will be required to implement stakeholder management solutions to ensure optimization of synergies between the two development lots.

Task 1.2 - Financial Due Diligence

It is expected that certain components of the financial due diligence will be covered under the deliverables in Task 1.1.

The Financial Due Diligence will however comprehensively analyze the market potential of the construction and operation of the Port at Manda Bay through the private sector in partnership with the Authority, assess the financial risks involved for both the public and the private parties, design a financial model for analyzing the impact of various project inputs on the earnings and net cash flow potential and compute the refinancing mechanisms of construction costs through port dues and other applicable revenue components.

The Financial Due Diligence is based on the financial model developed for the purpose of assessing the overall feasibility of the Public Private Partnership (PPP) project as well as from the point of view of the public and private parties, but entails more in-depth financial analysis. Particularly, the Financial Due Diligence aims at comparing alternative technologies/materials and structural designs and to optimize the transaction structure from the financial point of viewby comparing the performances of various PPP models.

The financial analysis model should be designed to provide for project structuring options including the imposition of appropriate project financing constraints including, but not limited to, Debt Service Coverage Ratio (DSCR) caps which optimize scenarios for the disbursement of available projected cash flows to potential project creditors and other ratios. The financial analysis model should have capabilities to allow the conduct of sensitivity analysis for the purpose of quantifying the financial and economic impacts of different structuring options.

In detail, the TA is requested to undertake the following comparative financial analyses using the following financial tools:

 Annual Cash Flow Projections - The TA will compute and analyze the cash flows, i.e. the expenditures made and revenues received during the lifetime of the facility. By computing annual expenditures and revenues, a year-by-year cash flow projection is established. Capital costs (including site preparation and construction) will be

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accounted for by assuming a fixed interest rate and amortizing the capital cost for the lifetime of the facility. Various possible locations of the additional 29 berths at the Port at Manda Bay project, as well as architectural design options and specifications can be compared using the same interest rate and, in the case of unequal material lives, assuming that a new identical material or technology is added at the end of the useful life of a shorter-lived technology.  Net Present Value or Present worth Method - Compound interest factors are used to compound or discount all cash flows. Technologies and design options are then ranked by comparing the equivalent values at time zero of each alternative using the same interest rate and equipment lifetime. The option with the highest present worth is the best technology or design from a financial standpoint.  Capitalized Cost or Life Cycle Cost Method - The present worth of a technology or design assuming an infinite life is computed, i.e., the capitalized cost is the initial cost plus the present value of an infinitely lived technology. The technology with the lowest capitalized cost is the best technology from an economic standpoint.  Annual Cost or Capital Recovery Method - The equivalent uniform annual costs of technology and design alternatives with unequal lives are compared assuming that each alternative is continuously replaced with an identical one at the end of its useful life up to the duration of the longest-lived alternative. The technology with the lowest annual cost is the best technology from an economic standpoint.  Return on Investment Method - The return on investment (ROI) is the ratio of annual profits to original investment. This may be used to compare the savings from design options in relation to known costs (such as those of operating the present Mombasa Port). The ROI will particularly be used to determine the transaction structure.  Sensitivity Analysis - Sensitivity Analyses will be used in any of the above methods to determine how sensitive the results are to changes in data forecasts. Sensitivity Analysis will be applied for optimizing the transaction structure by changing dominant cost factors one at a time.  Value-for-Money (VfM) Test - A Value for Money (VfM) analysis will be carried, including by comparing a risk-adjusted public sector comparator (PSC) model and the PPP reference model for the chosen or considered PPP structures. These provide costings of each procurement option in the form of a discounted cash-flow model adjusted for risk. The VfM analysis will also include other value characteristics of the project and to assess whether the PPP mode gives the best value for money as well as establish a measure of the VfM  Economic and Social Cost Benefit Analysis (ESCBA) – The identification and estimation of the economic costs and benefits of the project; and calculation of the economic internal rate of return (EIRR), including sensitivity analysis as required for PPP Committee approval.  Comprehensive risk matrix for all project risks, summary of the retained and transferable risks, NPV of all risks (retained and transferable) and NPV of all retained risks to be added onto the PPP reference model.

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 Develop an appropriate parametric tariff adjustment formula considering the impact of the said adjustment to all stakeholders.  The Financial Due Diligence is expected to encompass and inform on the following aspects of the PPP transaction: o Technical definition of the project and the distribution of Scope of Work among the parties involved; o Discussion on costs (direct and indirect) and assumptions made on cost estimates; o Discussion on revenue and assumptions made on revenue estimates; o Discussion on all model assumptions made in the construction of the model, including inflation rate, discount rate, depreciation and budgets; o Discussion on proposed PPP type; o Proposed PPP project structure and sources of funding; o Payment mechanism.

Task 1.3 - Legal Due Diligence

The Legal Due Diligence will identify a legally sound approach for the establishment of a PPP model for designing, building, financing and operating the Port at Manda Bay through the private sector, a general outline of parameters governing suitable PPP models shall be presented, based on international best practice and specific local circumstances.

This will include and commence with a high level analysis of principles paramount to those PPP option/s from both the viewpoint of a potential investor as well as the public party, leading on to the local legal implications of the identified and preferred PPP models, including flexible add-on elements and, finally, resulting in the identification of one or more most suitable PPP options.

Parallel to that, the existing regulatory framework will be assessed as to its actual effectiveness and as to its ability to accommodate the envisaged future PPP option/s, identifying any deficiencies and cornerstones of the current or future regulatory set up.

The TA’s Legal Expert(s) are requested, appreciating the Authority’s policy recommendation (as to the preferred methods of PPP), to phase the legal assessment along the following tasks:

 Assess current laws, acts, regulations, administrative issuances, policies and institutional assessment to ascertain the validity and viability of the proposed PPP structure for the project, including the Contracting Authority’s capacity to manage and monitor the implementation of the project once operational and recommend required changes to improve the governance or regulatory regime.  Formulate appropriate institutional arrangements for the project taking into consideration the roles and responsibilities of the Contracting Authority, other Government agencies and entities, the private sector, and other stakeholders, including consumers and the public at large.

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 The PPP options as determined in the PPP Act (2013) will be considered as to their suitability for this specific project and ranked according to their initial suitability. Based on the above findings and rankings, the Legal Experts will identify the cornerstones of any such PPP structure, thereby broadly identifying legal and actual implications and principles that would govern execution of these preferred PPP options.  Review and discuss applicable approaches for enhancing the project’s attractiveness to both investors and their lenders/financing institutions, such as Viability Gap Funding (VGF) and/or operational subsidies, fee payment mechanisms, performance guarantees, pre-conditions of a private operator for meeting service obligations, as well as specific default and risk clauses, and step-in rights of government.  Conduct a project risk analysis to determine, assess, allocate and manage risks (such as, but not limited to project, commercial/market risk, environmental, financial, political, economic, force majeure and legal risks) during all project stages. The risk analysis should cover valuation, allocation, and mitigation measures. In doing so, assessment and applicability of various risk mitigation mechanisms should be carried out, including review of the extent to which the risks of the project can be underwritten by commercial insurance cover and the likely cost of such cover.  Based on the risk analysis, prepare a contingent liability model for the Authority and/or other relevant GoK entities that quantify the contingent liabilities, how the same shall be managed, and the funding requirements.  The risk model shall include analysis on, but not limited to, higher than expected cost for the right of way, government variation orders, compensation for lower than agreed tariff levels and compensation caused by MAGA (Material Adverse Government Action) events.  The project’s risk analysis and allocation and contingent liabilities model shall be presented to representatives of the Authority and National Treasury (Debt Management Office (DMO))  Develop and provide detail to the legal architecture and design of the transaction, identifying, inter alia, the (i) type of PPP contract to be used (e.g. DBO, BOT, BTO, BOOT, etc); (ii) investment plan, how, where and when investments will be made; (iii) type of public sector support required, including terms and conditions; and Key Performance Indicator (KPI) and Penalty regimes.  Assist in resolving legal issues associated with the management of the social, economic, and environmental impacts of the project in a manner consistent with the Constitution of Kenya (2010) and other relevant national and county legislation, taking into consideration international best practices. The Legal Expert(s) are required to identify any obstacles that might impede the implementation process of any of the preferred PPP options and to outline the currently applicable regulatory framework.

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Task 1.4 - Environmental Sustainability and Social Safeguards

The TA’s team will encompass Environmental and Social Impact Experts who as observed in Task 1.1 will conduct a review of the ESIA scoping study for comprehensiveness to identify, assess and quantify the specific environmental and social risks and impacts associated with the Project. The review will ensure all environmental and social aspects of the project comply with Kenyan laws and regulations (as well as World Bank, European Investment Bank and or African Development Bank regulations depending on the development Partner supporting the process).

Specific tasks may entail, but are not limited to:

 Prepare/review and/or update, as necessary, the Environmental Impact Assessment (EIA) and Social Risk Assessment and Analysis. The Experts(s) will ensure that all aspects related to environmental and social safeguards have been considered, and necessary mitigation measures have been taken, adequate for purposes of securing approvals in accordance with the existing legislation, e.g. the Environmental Management and Coordination Act,  Conduct a climate and disaster risk vulnerability assessment, identifying potential threats and risks due to climate and geo-hazard situations/conditions in the covered/service areas;  Identify key risk areas and threats to the facilities; identify technical, administrative, institutional, infrastructure, and environmental mitigating measures and recommendations for integration into the over-all project design, financial and implementation proposal.  Prepare an appropriate poverty reduction and social strategy framework (e.g., in the context of resettlement plans, if applicable) with recommendations for involuntary resettlement in accordance with the legal framework in Kenya.  Conduct gender analysis and identification of gender issues and gender gaps that the project must address using available Legislated Guidelines.  Develop a Preliminary Environmental and Social Impact Assessment (PESIA) report, to be discussed in a stakeholder consultation process.

Task 1.5 - Market Sounding

To enable the preparation of a responsive Feasibility Report and a PPP model and contract acceptable to the potential investors, the TA shall undertake a Market Sounding exercise that shall include but not limited to the following tasks:

 Organize a meeting with the Authority and PPPU officials to provide an overview of the approach to market sounding;  Prepare a Market Sounding document that will include an overview of the project, the objectives of the Authority, the process of how the market sounding will be carried out,

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a list of questions to be responded by the relevant stakeholders, i.e. equity investors, debt financiers, contractors and operators, indicative project timetable and anticipated requirements from each party, the criteria and/or process for one-on-one sessions;  Issue the Market Sounding document to the market and undertake group or one-on- one Market Sounding sessions in association with the Authority and Public Private Partnership Unit (PPPU);  Organize and participate in a full day workshop with the PPPU and the Authority to review findings of the market sounding and determine key areas that will need consideration in preparing the Feasibility Report;  Prepare a Market Sounding Report that will summarize the findings from the exercise and will consist of, but is not limited to, the following information: o Market sounding objective; o Key issues that needed to be considered; o List of companies consulted; o List of Questions with answers from the group and one-on-one sessions; o Summary findings and matters considered in the Feasibility Report.

In summary, the TA will organize consultation meetings with concerned stakeholders, including, but not limited to, potential equity partners, investors, lenders, and guarantors to fulfill the market sounding requirements. The conclusions drawn from these consultation meetings shall be taken into account in the preparation of the feasibility report and in designing the PPP transaction structure.

Task 1.6 - Overall Feasibility Assessment

The TA is requested to submit a Revised Feasibility Report which will assess and demonstrate that a Public-Private Partnership (PPP) for development, operation and maintenance of The Port at Manda Bay Project is feasible and preferable as compared to other perceivable service delivery options, such as traditional public procurement and public ownership and operations.

In order to assess the overall feasibility of the PPP transaction, the TA will analyze and summaries the findings of the due diligence building on the following key factors affecting the financial and operational performance of the Port at Manda Bay Project:

 The regulatory framework influencing the transaction structure, the design, construction and operation, as well as the risk allocation among the public and the private parties;  The market for the Project, whereby inter alia a) Verifying projected future traffic volumes, b) Demonstrating sufficient willingness to pay user charges and/or other sustainable revenue streams,

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c) Undertaking sensitivity analyses as to e.g. tolerable tariff levels acceptable to users, and d) Assessing the need, VfM and level of government support, including a possible Viability Gap Funding (VGF) mechanism or minimum revenue guarantees.  Estimated cost-revenue projections, with a view to inter alia a) Projecting estimated construction costs and refinancing mechanisms with regional or international lending institutions, b) Analyzing various financing scenarios, c) Designing a financial model for analyzing the impact of various project inputs on the earnings and net cash flow potential, d) Assessing the projected earnings potential based on realistic pricing structures, and e) Recommend an adequate concession / licensing period derived from the above financial model When assessing the overall feasibility of the project, the Experts will need to consider that the Authority expects that the design, construction and operation and maintenance costs during the concession period are to be entirely borne by the private sector. The Contracting Authority’s/Public contribution is understood to include cost-free provision of development land.

The Contracting Authority is interested in being an equity investor in the project. The Transaction Advisor is expected to advise the Contracting Authority on the viability of such participation, the pros, and cons of such an approach and the most effective way of financing this participation.

Within these parameters, the TA is requested to propose any other forms of Government support, deemed to be appropriate and acceptable to GoK. Furthermore, the Experts are expected to discuss the advantages and disadvantages of various PPP methods, as provided for by the PPP Act (2013), and to recommend the most favorable model.

The TA is requested to consider the economic impact of the alternative scenarios, and the balance between those that may optimize financial viability, and those that may make the most significant economic impact.

The Feasibility Report shall contain a SWOT (Strengths-Weaknesses-Opportunities-Threats) Analysis and/or a Logical Results Framework matrix, summarizing the above findings.

Task 1.7 - PPP Transaction Plan

The PPP Transaction Plan consolidates the findings of the Feasibility Report and the full-scale due diligence by summarizing the legal, financial and technical aspects analyzed and leading to a detailed project description. The PPP Transaction Plan maps out all key factors of the

Building Africa’s’ Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya. 21 proposed PPP project, defining the transaction structure, the scope and volume of the project, defines the project parties and their contributions whereby allocating risks among the parties involved and provides a timetable and task schedule for subsequent phases up to contract closure.

The PPP Transaction Plan will be submitted to the Authority for endorsement and, subsequent to GoK approval, is to inform the development of transaction documents. The PPP Transaction Plan will encompass, but not be limited to, the following key components:

Definition of the scope of the project  A summary of how the proposed PPP project addresses the Contracting Authority’s strategic objectives;  A summary of the output specifications;  A list of significant Government assets which will be used for the project (such as land and existing structures, access roads, etc.);  A brief indication of the type of PPP project proposed and its envisaged payment mechanism.

Solution Options Analysis  Financial impacts;  Funding and affordability;  Project risks (to be laid out in a Risk Matrix);  Service delivery arrangements;  Technical analysis;  Site issues;  Legislation and regulations;  Human resources;  Market capability and investor interest;  PPP project structure, describing the relationship between GoK entities, the locally registered project company, shareholders, lenders, supplies, subcontractors and other players;  Contributions by GoK (capital and/or guarantees, permits, consents, etc.);  Payment mechanism;  Calculated and consolidated costs;  Sensitivity Analysis.

Transaction Plan and Schedule  Detailed transaction schedule up to transaction closure (contract signing);  Definition of GoK responsibilities during the transaction implementation (appointment of Steering and Technical Committees, etc.);

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 Outstanding regulatory issues, consents or permits to be issued or resolved by GoK prior to the bidding phase;  Post-bid and contract management frameworks;  Any other issue deemed relevant to the transaction implementation.

Task 1.8 - Support to the Contracting Authority on Securing PPP Committee Approval and All Other Government Approvals

The TA shall then complete all required documents to be submitted to the PPPU and PPP Committee, and assist the Contracting Authority to address all PPPU concerns until the approval is accorded by the PPP Committee and other concerned parties. These documents shall include but not be limited to the following: a) Six (6) electronic and hard copies, in MS Word format, of the Feasibility Report and PPP Transaction Plan; b) Accomplished checklist for feasibility studies of PPP projects; c) Two (2) electronic copies, in MS Excel format of the financial analysis/financial model in traceable formula format; d) Environmental Impact Assessment Report (EIA)/ National Environmental Management Compliance (NEMA) Certificate in electronic and hard copies (MS Word file); e) Land acquisition plan and social strategy frameworks (i.e. resettlement and gender action plan, etc.); f) Location map (with electronic copy); and g) Other documents that may be required by the PPP Unit.

If necessary, the Transaction Advisor shall assist the Authority in obtaining Public Private Partnership Committee approval for offering bidders a reasonable rate of return in case of a negotiated project (e.g. in case of a single complying bid).

The Transaction Advisor shall also assist the Authority in securing the opinion of the State Law Office (SLO) on the draft PPP contract.

PHASE II: Development of Transaction Documents

The Transaction Advisor shall prepare all the necessary documents to undertake a competitive and transparent bidding process, and provide support during the entire PPP bidding process until the award of the contract to a successful bidder, including drafting the TOR of the Independent Expert (IE). The tasks of the Transaction Advisor in this phase include, inter alia, the following:

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Task 2.1 - Bid Process Design and Bid Documents

The Transaction Advisor shall recommend an appropriate bid strategy in accordance with the PPP Act (i.e. develop a blueprint of the bid process and appropriate governance for the bid). The bid process design and the choice between a single-stage process vis-à-vis a two-stage process or the need for a competitive dialogue will be evaluated. The TA shall provide advice and justification on the best-value bidding parameter, including, but not limited to least cost/NPV, least viability gap funding, lowest average tariff, shortest concession period, lowest operating subsidy, highest concession fees, etc.

Further, the TA shall prepare all necessary bid/tender documents, including but not limited to: Invitation of Request for Qualification, Qualification of Private Party, Invitation to Bid (ITB), draft PPP Agreement, Information Memorandum, design criteria and performance specifications, bid bulletins, qualification and bid evaluation criteria, and Bid Forms such as Bid Letter, Statement of Bid, Technical Bid Proposal, Financial Bid Proposal, etc.

PPP Agreement: The TA shall prepare a draft PPP agreement in close coordination with the Contracting Authority. The said draft PPP agreement must take into account the agreed risk allocation regime, contingent liabilities, termination events, Key Performance Indicators (KPIs) and penalties for their violations, and use best practice to maximize competition and ensure optimal pricing while protecting Government and consumer’s interests with a view to facilitate project implementation and manageability over the project term.

Task 2.2 - Support during Bidding Process and Evaluation

The Transaction Advisor shall assist the Authority in the following activities: a. preparation or collation of documents and data to be made available in a data room, if deemed necessary, for prospective bidders; b. issuance of all bidding-related notices/requests and supplemental notices; c. conduct of the pre-bid conference/s; d. conduct of bidding; e. responding to queries upon proper consultation with the Contracting Authority and the PPP Unit; f. pre-qualification of bidders and evaluation of bids; g. contract finalization and award; h. preparation of minutes of all meetings, and i. Drafting of TOR for the procurement of the Independent Expert (IE).

The TA, especially the Legal Expert and the Technical Expert shall be present upon the request of Contracting Authority, especially during the tender process.

If it is determined at the tender evaluation stage that the project will not be implemented under PPP arrangements, the consultancy services shall be deemed to have been completed under

Building Africa’s’ Transformative and Game Changer Infrastructure to Deliver a Just and Prosperous Kenya. 24 the contract, and the Transaction Advisor shall be paid for the milestone(s) completed. The PPP Unit shall not be liable for any further payment and the contract shall cease to exist.

PHASE III: Assistance until Financial Close of the Project

The Transaction Advisor shall provide all the required assistance and advisory support until the financial close of the project (or a period of 180 calendar days from the effective date of the contractual agreements signed with the private sector proponent or the concessionaire, whichever is earlier).

The TA must assist the Authority with all functions relating to grant of approval on any issue to the private sector proponent or signing any agreement or any other document with the private sector proponent or assisting in providing interpretations relating to any matter until financial close.

The TA must also compile a comprehensive close-out report and case study, and must incorporate any additional factors that may be required by the Contracting Authority. The close-out report will be a confidential document of the Contracting Authority and the PPP Unit. The Feasibility Report (excluding any confidential aspects) will become a public document, made available on various government websites.

The Transaction Advisor must, in close liaison with the Authority, draft a comprehensive PPP management plan for the Authority, in accordance with the provisions of the PPP agreement, to help the Authority in the management of the Project and its risks, rights and obligations after financial close.

The Transaction Advisor for the duration of their contract, shall make their team available in Nairobi to receive comments or queries and provide responses thereto, and entertain consultations, whenever necessary.

The Transaction Advisor shall prepare a monthly report of the status of activities, issues encountered and steps taken to resolve them and update milestones and timelines. The scope of the work shall be read in conjunction with the specific terms of reference prescribed for each team member in Section VI below to successfully complete the assignment.

While carrying out the specific tasks, the Transaction Advisor shall ensure knowledge transfer and capacity building of the government counterpart staff during the entire duration of the assignment. The Transaction Advisor shall conduct project “lessons learned” sessions prior to submission of the draft close-out report wherein results of the same shall be incorporated in said report.

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EXPERTS’ PROFILE AND LEVEL OF EFFORT

The Transaction Advisor will include qualified personnel in the field of port design and construction; public-private partnerships; project preparation and appraisal; project management; financial modeling/structuring; investment promotion; economic and financial analysis; risk analysis; procurement; policy and legal issues.

The consulting firms/experts shall have sufficient qualified personnel, including international experts affiliated/associated with internationally recognized firms, as indicated in the TOR and resources to provide all necessary professional, technical, and expert services as required accomplishing all the required services within the prescribed time.

The team shall have extensive demonstrated international and country-specific experience/expertise that would include knowledge of the sector, regulatory issues involved and the initiatives taken by the Government for the successful implementation of PPP projects; the project’s taxation framework, including current tax regime; the country’s accounting systems; domestic and global insurance and guarantee sector and their products; special privileges and incentives available to the PPP projects; concessional financing options available for PPP projects from the public sector; and other country-specific knowledge.

The Client expects the Transaction Advisor to primarily nominate experts who are affiliated/associated or its associate or joint-venture partner (forming part of its consortium, as pre-qualified in the Consultant panel); and/or tap international experts who are affiliated/associated with internationally recognized firms, especially the Technical and Legal Specialists, as well as national experts with extensive experience in their respective fields. As such, consulting firms are encouraged to form joint ventures or associations with other consulting firms to enhance their capabilities, strengthen the technical responsiveness of their proposals, make available bigger pools of experts, and enhance the value and quality of their services in accordance with the provision contained in the Instructions to Bidders.

The list of key experts provided hereunder is indicative and the Transaction Advisor shall include non-key/additional experts that may be required to successfully complete the assignment. The tasks for each key expert shall be read in conjunction with the scope of work.

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TABLE 1: ANALYSIS OF KEY EXPERTS PROFILE AND LEVEL OF EFFORT Level of Position Expertise Required Effort PPP Expert/  A university degree in Management, Economics, Engineering or any other relevant field. Team  A minimum of 15 years demonstrated experience in providing PPP transaction advisory Leader services/development of large infrastructure projects on PPP basis including extensive experience in project structuring and risk analysis, allocation and management; project agreements; bid process management including preparation of bidding process documentation and post-bid process monitoring. 15 months  Successful preparation of PPP projects with at least three financially closed projects.  Relevant qualifications and experience in ports/marine infrastructure operation & maintenance projects in general, and in Africa in particular; Experience in ports/marine projects will be an additional merit.  Must be able to communicate effectively in English, especially in report writing. Financial  A university degree in Finance/Financial Engineering, Master of Business Administration, Expert Business Economics or any other relevant field.  At least 15 years of professional experience in project finance, with a proven track record in financial valuation and financial modeling of PPP projects.  Demonstrated experience in dealing with capital market institution as, investment banks, global 12 months insurance and guarantee products, etc., and experience in raising funds for similar PPP projects until financial close and successful contract award with at least one financially closed PPP project.  Experience inports/marine projects will be an additional merit.  Effective English communication and writing skills, especially in report writing, are essential.

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Level of Position Expertise Required Effort Legal Expert  A university degree in Law, with excellent knowledge of the locally applicable laws in the infrastructure, environment, and Maritime sectors.  A minimum of 10 years demonstrated experience in drafting contractual agreements and other related documents/agreements; PPP procurement, managing bidding process, and resolving legal issues, policy and institutional assessment; and, successful preparation of PPP projects 12 months with at least three financially closed PPP project.  Experience in ports/marine projects will be an additional merit.  Effective English communication and writing skills, especially in report writing, are essential. Port Planner /  A University degree in Engineering, Construction Management, Economics, Business Economist Administration, or related field from an accredited college or university.  A minimum of ten (10) years’ experience with Planning and Scheduling.  A thorough understanding & capability to schedule complex engineering and construction 15 months projects. Recent aptitude at an expert level of Excel and Access will be an additional merit.  Proven ability to lead independently on complex project controls issues with superior interpersonal skills, creative solution and problem solving skills.  Effective English communication and writing skills, especially in report writing, are essential. Special  A University Degree in Business Administration, Public Administration, Public Policy, Political or Economic Social Science/Law, or other relevant subject; a qualification in, or/and experience of Zones development studies/international relations desirable Specialist  Minimum seven (7) years of professional experience in management or governance or institutional development ; 10 months  Proven programming, operations and project management experience at a senior level required;  Substantial work experience in a government context desirable;

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Level of Position Expertise Required Effort  Experience of working in developing and post-conflict country environment and rural areas is highly desirable;  Excellent drafting and communication skills; good editorial capacity;  Experience in staff development preferably in a developing country environment a plus;  Effective English communication and writing skills, especially in report writing, are essential. Spatial /  Bachelor’s degree in Natural Resources Management, Marine Science, Geography, GIS or Mater related field. Planning  At least 5 years of professional experience and demonstrated marine spatial planning Specialist experience.  Proficiency in the development and management of spatial data, relational databases and developing spatial models is preferred.  Experience applying and providing training in the use of spatial planning tools in natural 10 months resources management applications is highly desired  Experience working with geospatial datasets, remote sensing / geospatial associations, or geospatial humanitarian missions is highly desired.  Ability to maintain effective working relationships with all levels of staff, donors, and stakeholders.  Effective English communication and writing skills, especially in report writing, are essential. Marine  University degree in Engineering or related field, with a relevant post-graduate qualification in Engineer marine engineering.  A minimum of 15 years’ demonstrated experience in similar Project design and cost estimation. 12 months Relevant qualifications and experience in port projects in general, and in Africa in particular.  Effective English communication and writing skills, especially in report writing, are essential.

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Level of Position Expertise Required Effort Civil /  University degree in Engineering or related field, with a relevant post-graduate qualification in Structural civil/structural engineering. Engineer  A minimum of 15 years’ demonstrated experience in port design and cost estimation. Relevant 10 months qualifications and experience in port projects in general, and in Africa in particular.  Effective English communication and writing skills, especially in report writing, are essential. Social  A University degree in social sciences, development studies or other related field. Development  A minimum of 10 years’ demonstrated experience in the assessment of social impacts, gender and analysis and mitigation measures for 3 investment projects (public and private funded). Gender Thorough knowledge of Kenyan labour laws and other related laws/provisions will be additional Specialist merit.  Experience in the application of development Partners (International Development 6 Months Association’s (IDA) in particular) Environmental and Social Management Framework on Safeguards Policy Statement (involuntary resettlement safeguards, indigenous peoples safeguards, Physical Cultural Resources, etc.) in implementing PPP projects will be an additional merit. Relevant qualifications and experience in Ports infrastructure development, Operation & Maintenance projects in general, and in Africa in particular, will be an advantage.  Effective English communication and writing skills, especially in report writing, are essential. Environmental  A University degree in social sciences, development studies or other related field. Specialist  5 years’ demonstrated experience in environmental impact assessment and mitigation measures for 3 projects (public and private funded) in accordance with the specific 6 months environmental and safeguard requirements of existing Kenyan laws. Experience in marine/ports projects will be an additional merit.  Effective English communication and writing skills, especially in report writing, are essential. Total Duration 15 MONTHS

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TABLE 2: BUDGET FOR LAMU PORT TRANSACTION ADVISORY CONSULTANCY

Position Man Rate/ man Total US.$ months months US$ KEY EXPERTS PPP Expert/Team Leader 15 25,000 375,000 Financial Expert 12 20,000 240,000 Legal Expert 12 20,000 225,000 Port Planner/Economist 15 18,000 270,000 Special Economic Zones Specialist 10 15,000 150,000 Spatial/Mater Planning Specialist 10 15,000 150,000 Marine Engineer 10 15,000 150,000 Civil/Structure Engineer 10 12,000 120,000 Social Development & Gender Specialist 6 12,000 72,000 Environmental Specialist 6 12,000 72,000 Sub Total 1,824,000 NON KEY EXPERTS Maintenance & Management Engineer 3 10,000 30,000 Port Engineer 3 10,000 30,000 Quality Surveyor/Cost Engineer 2 8,000 16,000 Pavement/Materials Engineer 2 8,000 16,000 Structures Engineer 2 8,000 16,000 CADD Expert 2 8,000 16,000 Sub Total 124,000 ADMINISTRATIVE STAFF Office Manager 22 3500 77,000 Computer Operator 22 2500 55,000 Office Assistant 22 850 18,700 Sub Total 150,700 REIMBURSABLE EXPENSES Per diem Reimbursable expenses for Experts 28,000 Flights, Travel 35,000 Communications Telephone, Internet, Telex, 25,000 Telegram, Postage etc. Local Transportation 28,000 Office Rent, furniture, equipment, stationery 120,000 and supplies Dissemination Costs (REPORTS, translation, 25,000 editing, publication, etc.) Logistics (workshops, conference facilities, etc.) 120,000 Project Administrative Operations 135,000 Sub Total 516,000 TOTAL 2,614,700

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