26 January 2016

Kenya: Investors Raise Concerns Over Multi-Billion Konza City Plan

Developers eyeing a share of the proposed Konza Techno City are raising queries they want addressed before they can fully commit themselves to the multi-billion shillings project.

The Developers say the government must assure them that the Sh1.4 trillion project will have steady low cost energy as well as sufficient and uninterrupted water supply as stated in the city's plan.

Though construction of a section of the city is set to begin in April this year, investors eyeing the land on which the city will sit have held onto their funds as they wait for a proof that infrastructure will be rolled out as promised on paper.

At a developers' forum last week, eagerness to get a piece of the land was watered down by questions on electricity connection, water reliability, lease agreement format, traffic plan and how to prevent slums from sprouting in the smart city.

"By the time we come in to begin developments, we want to have guarantee of world-class infrastructure. We have big multinationals looking to set foot at Konza, we need proof that we will not be let down," said Kenya Association of Property Developers Chairman Hamish Govani at an interview last week.

Delegation of German Industry and Commerce in Kenya Project Assistant Thilo Gabriel Vogeler, said the initiative is "quite interesting," save for a few issues.


Mr Vogeler poked holes into the plan by US firm, Tetra Tech which won a Sh2.1 billion contract to oversee planning and construction of the city.

"This (Konza city) is interesting especially for German suppliers of technology of renewable energy, power supply, power storage and efficiency technology, based on the smart city concept," said Mr Vogeler.

"However, since frequent power blackouts are a common occurrence in Nairobi, I would like to know how they will ensure reliability and constant supply 60km away from Nairobi."

Mr Vogeler also pointed out the lack of clear transport infrastructure in the project: "There is a mention of a transport concept in the published Konza marketing material but it is not clear how transport from Nairobi to the Techno City will be addressed especially to evade traffic."

The complaints come even as Konza Technopolis Development Authority (KoTDA) renews the call for investors to take up space in the first phase of the mega project. The expression of interest expires on Thursday this week.

Developers are to raise between Sh250 million and Sh2.6 billion for various projects in phase one, on about 400 acres of the 5,000 acres set aside for the development of Konza city.

Already, government has laid infrastructure for the first phase of the project and is expecting developers to move in and begin constructions.

The city is designed to be Africa's Silicon Savannah, contributing Sh100 billion (approximately 2 per cent) to the country's Gross Domestic Product (GDP) once phase one is operational.

The land will be leased out to investors for the development of low and higher density buildings that accommodate both schools, commercial and residential premises.

However, developers are uncertain on the lease agreement. While developers want long-term leases because of the billions of shillings they plan to invest in Konza, government wants to sign a short-term renewable lease.

According to former ICT Permanent Secretary Bitange Ndemo, the biggest problem is to identify the serious developers to take up land at Konza.

"There are some who just want land and they will not develop it," he said.

"It is important that government adopts the short-term lease format where developers are given only six months to begin construction from the time of obtaining the land, failure to adhere means the loss of land to a more serious tenant."

ICT Cabinet Secretary Joe Mucheru is optimistic that this year there will be a lot of activity as developers begin putting up their structures in April.

The project, to be set up through a public-private partnership, will see the government provide land and build key infrastructure such as road, railway, water, telecoms and sewerage systems.

"We have a firm foundation at Konza. We expect to see some activity, some ground-breaking, the roads have been done, the first Sh1.2 billion building which hosts the KoTDA offices and is a mixed use facility is expected March this year," said Mr Mucheru at an interview last week.

"Before the buildings take off, we are constantly engaging investors and the private sector to ensure that there is business continuity and clarity on several issues."

KoTDA chief executive John Tanui said developers want to know the position on a number of issues.

"We want to bring up Konza to be right, so we are working on various aspects of water, power, transport to ensure constant reliability without any setbacks."


He added that the ministry and all stakeholders are providing the necessary support to ensure that the bottlenecks are sealed.

KoTDA is also pushing for speedy enactment of its legal framework, The Konza Bill, to enable it sign leases with investors. The development of the city is at the moment guided by a parliamentary legal notice, making it hard for key decisions -- such as project funding -- to be executed.

Konza was last year allocated Sh0.8 billion from the exchequer. The amount however is insufficient for the laying of infrastructure at the site. It is among reasons to blame for the slow pace of the project.

However, Mr Tanui told Smart Company that the Konza Bill which was submitted to the Cabinet in May 2014, ones enacted will allow for the authority to seek funds from donors and hasten the project's implementation.

Last week, KoTDA allayed fears of water shortage in future as the tech city becomes fully operational in 2018.

Mr Tanui said the authority signed an agreement with Tanathi Water Services Board Nol-Turesh Loitoktok Water and Sanitation Company limited (NOLWASCO) to supply the techno city with 2000 cubic metres daily.

At the moment, Konza is served by 1,200 cubic metres daily from the seven boreholes which have already been dug in the City. For implementation of phase 1, the city requires 1000 cubic metres.

"The Nol-Turesh water will complement the boreholes that have been drilled on site with a combined yield of 1200 m3/day that will provide water especially for construction of Phase 1A and potentially for the early years of Phase 1," Mr Tanui said.

Konza Techno City is a national flagship Vision 2030 project with the objective of attracting investors, and more than 230,000 people living and working at the technopolis when it's complete.

"We are working with other government agencies to finalise on the key infrastructure such as power, broadband, access roads, rail services, water and sewerage that will be concluded in time to match investors timelines. In addition, we will have a dedicated police post to ensure security for all participating in the initial developments at Konza City," Eng Tanui said.


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