Undersea Cable to Link E. Africa, Europe

26 08 2009

The Associated Press
Monday, November 26, 2007; 5:52 PM

NAIROBI, Kenya — A consortium of companies planning an undersea cable linking eastern Africa with Europe on Monday won the funding it needed to start construction, a move organizers said will bring this part of the world affordable and reliable telecommunications for the first time.

Five development finance institutions agreed to loan the consortium a total of $70.7 million. The East African Submarine Cable System has been working on the $235 million fiber-optic cable project for five years, said Lars Thunell, the executive vice president of the International Finance Corp., the private sector lending arm of the World Bank.

“Typical cost of internet access in East Africa is $200 to $300 a month, which is one of the highest in the world,” Thunell told journalists. “We expect that prices will drop about two-thirds when this project is in place and then continue down.”

Two weeks ago, an even larger project, called SEACOM, also completed its financing for an undersea fiber optic cable. That 9,321-mile cable will link Kenya, Madagascar, Mozambique and Tanzania with international broadband cable in South Africa, India and Europe and is estimated to cost $650 million.

Three other projects have been in the works to link 22 eastern, central and southern African countries to the world’s network of submarine cables.

SEACOM, in which five American, South African and Kenyan companies have invested, expects its cable to be in service by June 2009. Two other undersea cable projects for eastern Africa are still looking for investors.

The Indian Ocean seabed near eastern African is the world’s only seabed without a fiber-optic cable, which means the region must rely heavily on limited and expensive satellite links for its Internet access.

A total of 29 companies form the consortium that received Monday’s financing, offered jointly by the IFC, the European Investment Bank, the African Development Bank, the French Development Agency and Germany’s KfW development bank.

Many member companies paid $10 million to $30 million each to get the project going, said Sammy Kirui, the chairman of the cable consortium, the East African Submarine Cable System.

The loans signed Monday will compensate for the lack of contributions from financially weaker members of the consortium, he said.

“We have the money now. What we are working on is basically logistics and we have signed the agreements and everything else is in place. Definitely, we are going to have a close at the end of this week in Johannesburg,” Kirui said.

Kirui said work will start next month and finish by March 2009.

The cable will be 6,214 miles long, stretching from South Africa to Sudan. At South Africa the cable will connect with another linking South Africa and western Africa with Europe. The consortium will also lay fiber-optic cables to connect inland networks with the undersea cable.

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