Kenya, South Sudan and Ethiopia have launched a controversial development project to build a port, oil refinery and rail network near the UN heritage-site island of Lamu.

Political leaders from the three countries gathered in Kenya’s mainland Lamu district on Friday to launch the $25bn project that is expected to become a vital transport and economic development corridor for the region.

Kenyan President Mwai Kibaki hosted South Sudanese counterpart Salva Kiir and Meles Zenawi, the Ethiopian Prime Minister, at an inauguration ceremony in Mokowe on the Indian Ocean coast.

Al Jazeera’s Nazanine Moshiri, reporting from Mokowe, said: “This is a massive project, the first of its kind here in Kenya. All three countries say that they will share the cost, and there are reports that the Chinese will contribute.

“But it is very difficult to see how they will be able to share so much money in such a short space of time.”

The project envisions 32 port berths connected to the region by thousands of kilometres of new rail tracks and a pipeline delivering South Sudanese oil to the new refinery.

Our correspondent added: “They key to all of this for South Sudan is the oil pipeline of more than a thousand kilometres, which would solve the problem of how to get its crude oil out to the international community.

“The railway network, which will connect South Sudan and Kenya and also connect Kenya to Ethiopia, will boost the economy and create jobs.”

Local concerns

While Kenya describes the project as the most ambitious ever undertaken by any independent African country, Lamu residents fear the sheer scope of the project will affect their livelihood.

The local community are deeply concerned because they fear that they are not being compensated for the project and they say that they are going to loose out on tourism and fishing that generates most of the income in the coastal town.

“There will be an over-exploitation of resources without proper mitigation measures in place,” said Atwaa Salim Mohamed of the Lamu Marine Conservation Trust.

“We’ll be losing a certain percentage of our mangroves. We’ll be losing a certain percentage of our coral reefs, and we’ll be losing our pristine beaches to some extent, and also the fishing and breeding grounds for turtles.”

There are also fears the project could affect Lamu town whose ancient Swahili architecture is listed as a world heritage site by the UN’s UNESCO cultural body.

The project will have to overcome possible threats from bandits in northern Kenya and al-Shabab fighters operating close to Lamu in nearby Somalia, as well as from pirates preying on the region’s maritime traffic.