Rwanda News Agency/Agence Rwandaise d'Information (Kigali)
13 September 2007
Kigali — The African Development Bank (AfDB) is to provide a US $ 14.5 million loan to the troubled East African Submarine Cable System (EASSy) project expected to cost 235 million dollars, RNA has established.
The bank announced today that the financing will be channeled through the cable's Special Purpose Vehicle (SPV) that is also known as the West Indian Ocean Cable Company.
The Special Purpose Vehicle (SPV) is the entity set up by telecom companies, governments and donors that will own, develop, operate and maintain the Broadband cable. It is based in Kigali but partners are yet to agree on how it will operate in other countries.
The total construction cost of the 9,000 km cable is estimated at $235 million. Other financing will come from telecom operators and Development Finance Institutions.
The submarine fiber-optic cable will run from Port Sudan - Sudan to Mtunzini - South Africa, along the east coast of Africa connecting 22 coastal and land-locked countries to each other.
Last month, the consortium of investors known as the EASSy Consortium - said they had obtained US$30 million in cash to kick start the project.
According to the East African Business Week, the investors said they had also secured the additional $205 million in payment guarantees from members, consisting of 27 operators and seven international funding institutions.
The US$30 million injection fills the gap that was lacking to meet the total project cost of $235 million. Telkom South Africa and the MTN Group, both giant operators from that country are among investors in the EASSy project.
French contractor, Alcatel-Lucent, won the $205m tender in July this year to construct the undersea cable expected to be operation in 2009.
The plan, hatched in 2003, was simple enough - lay an 9,900km (6,200-mile) submarine cable touching at several points along the way, and then link it up with the rest of the world.
But the scheme has become entangled in disagreements between operators and governments over its business model. There is also bickering from some governments against others.
Governments such as South Africa want to keep control of the cable to ensure there is cheaper connectivity that would promote development and make African countries more attractive destinations.
Government planners argue the cable will improve access for 250 million Africans and substantially reduce costs for consumers and businesses in the Eastern and Southern African region.
Experts says connecting a call-centre with 25 agents costs $17,000 a month in Kenya, compared with $600-900 elsewhere. This is what NEPAD and some governments want to avoid.
The companies that are taking part in the deal want market forces to determine costs of the internet and signals that will come from teh cable. Kenya also shares the same understanding and believes South Africa wants to dominate other small countries.
In September last year, Kenya announced plans for its own undersea internet cable as counter move against South Africa. The fibre optic cable, expected to cost $110m, would run from Mombasa to Fujairah in the Gulf of Oman.
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