Kenya's main port is targeting cargo for reconstruction of southern Sudan to expand its business, and the government is planning a second port to serve northern neighbors like Ethiopia, an official said on Tuesday.

After more than two decades of civil war in south Sudan, billions of dollars worth of construction materials and machinery are expected to start flowing soon into the long-neglected region to build infrastructure and amenities.

The Kenya Ports Authority (KPA) says transit cargo passing through its Mombasa port -- the biggest in east Africa -- and destined for southern Sudan has already risen in the past year and should keep growing.

Reconstruction of Sudan means they are looking for entry and exit points, Bernard Osero, a senior KPA public relations official, told Reuters in a telephone interview.

Sudan pumps around 500,000 barrels per day of crude and the south could own many lucrative oil fields through a peace agreement between the ruling party and the former rebel Sudan People's Liberation Movement signed in Kenya early in 2005.

They want to export their oil through the port. In the time being, they want to use tankers because (building) a pipeline takes time, Osero added.

In 2005, 4.2 percent of transit cargo was headed for Sudan, an increase from 2.3 percent in the previous year.

Sudan, Africa's largest country, has a port on its eastern Red Sea coast, but that is far from the south, meaning Kenya remains a potentially more convenient option.

NEW PORT IN LAMU?

Osero said the Kenyan government was planning a second commercial port at its Indian Ocean island of Lamu, north of Mombasa, to serve Sudan.

The KPA was also in talks with Ethiopian authorities to handle some of the landlocked country's cargo, Osero said.

Ethiopia currently imports through Djibouti but was seeking an alternative route, he said.

In 2005, the Mombasa port handled 13.3 million tonnes, 3.5 million of which was headed for hinterland countries.

Our container terminal can handle 250,000 TEUs (twenty-foot equivalent units) but for the last 5 years, we've surpassed this capacity. It is now saturated, Osero said.

In 2005, the port handled 436,631 TEUs, almost double its design capacity.

Osero said that KPA plans to increase its container storage space to deal with the congestion.

The port is suffering from a snarl up in the removal of cargo due to an inefficient railway system and a dilapidated road network.

Currently, the container terminal has 2,803 ground slots which can hold 9,800 containers when stacked 3 high.

After completion of the expansion program by end of August 2006, the ground slots will increase to 4,133 and can hold 14,500 containers when stacked 3 high, he said.

KPA recently modernized its equipment and is seeing faster unloading of ships. But their transfer to importers is slow as Kenya Railways, a state corporation, has been unable to upgrade its locomotives and rails to accommodate cargo from the port.

The railway takes less than 30 percent of cargo and the rest by road, although rail is the cheaper mode of transport.

Many importers have resorted to moving their merchandise by roads using trucks, but Kenya's potholed roads have made it an expensive and time consuming venture.

Kenya and Uganda have jointly awarded a concession deal to a consortium led by South Africa's Sheltam Trade Close Corporation to operate the two countries' railways systems.

Osero said the new management was expected to start work at the cash-strapped Kenya Railways at the beginning of August.

Kenya Ethiopia Sudan