Proposed legislation opens electricity retail to competition and Geothermal producers to pay royalties of up to 5% of sales
Lawmakers in East Africa’s biggest economy approved a new law that could abolish Kenya Power Ltd.’s monopoly on grid-electricity distribution.
With the proposed new legislation, which still needs presidential approval, the Energy Regulatory Commission will license new companies to sell power and take away Kenya Power’s control over the dispatch center, which determines what energy sources will feed the national grid.
The Energy Bill also introduces royalties from geothermal generation, parliamentary majority leader Aden Duale said by phone from the capital, Nairobi. Africa’s biggest geothermal electricity producer will expect between 1 percent and 2.5 percent of revenue during the first decade of a geothermal license being issued.
The levy will then climb to between 2 percent and 5 percent, with a fifth of the proceeds remitted to regional governments, 5 percent to the local community, and the rest to the national government.
Source: Bloomberg News
An offshore company is among the first to reap hundreds of millions of shillings from the Kenyan oil that was discovered six years ago.
Primefuels Holdings Ltd, based in the highly-secretive Guernsey Channel Islands, has leased the equipment for trucking of crude from the Turkana oil fields. Its local subsidiary, Primefuels Kenya Ltd, will grab the biggest chunk of the Sh1.5 billion budgeted to pay transporters who include smaller local firms.
Company records indicate the offshore firm owns all except one of the 750,000 shares in Primefuels Kenya. The single share is held by Hanif Amirali Somji.
Flagged off
President flagged off four of the 110 insulated containers to be supplied by the company for the journey to the coastal city of Mombasa for storage.
Nairobi-based logistics firm Multiple Hauliers, owned by billionaire Rajinder Singh Baryan, and Oilfield Movers associated with former National Oil boss Nyaga Mwendia, are the hauliers. Efforts to reach Mr Nyaga were fruitless as his phone went unanswered.
Founded as a Kenyan firm by Asif Abdulla in 1996, the firm now has its operations in five countries in the region and possibly got new directors before its ownership was taken offshore. Registering firms in secretive jurisdictions including Guernsey Channel Islands provides a layer of protection for the real owners, since company records are not readily available.
Sunil Edupuganti, the operations manager, told The Standard of his excitement about the actual start of the crude oil transportation. The contract was awarded a year ago.
“It is lucrative for us as a firm and we are excited to be part of the deal,” he said in a telephone interview yesterday.
He added that the contract runs for three years, translating to assured business as Kenya spares no cent in its push to join the exclusive club of petroleum-producing countries. The President admitted in Turkana that crude oil trucking under the Early Oil Pilot Scheme would be a money-burning venture.
Except suppliers to the oil exploration firm Tullow, the three logistics companies are drawing profits from the actual crude ahead of the country, which would receive the first shilling some time in 2018 at the earliest. This is because moving the oil by road would take at least eight months before there are sufficient stockpiles in Mombasa for export.
The Ministry of Energy has however defended the programme, saying it is a worthy experiment to gauge how the market will price Kenyan oil. Each of the insulated containers has the capacity to carry 150 barrels, which is equivalent to about 24,000 litres.
Storage tanks
Initial projections indicate 2,000 barrels will be trucked from the oil fields to the storage tanks daily, before doubling to full capacity over time. Mr Edupuganti said he was awaiting approving from Tullow and the Government before making orders for 50 additional transtainers – bringing the total to 110.
But with just as many trucks on the road, each taking at least three days to cover the 1,100km, achieving the 2,000 barrels a day is already a tall order. Struggling parastatal Kenya Railways Corporation had hoped to land a portion of the lucrative business by transporting the oil from Eldoret to Mombasa on the old railway line but failed to convince the State.
Economist David Ndii claimed in a social media post yesterday that the Early Oil Pilot Scheme could have offered a lifeline for the old railway to survive (competition from) the SGR

The Airports Council International has recognised JKIA for its excellence in customer service. It was named the best-improved airport in Africa in the 2017 ACI Airport Service Quality Awards.

In January, Interior CS Fred Matiang’i made a surprise visit to the airport and found many work stations unmanned. He ordered mandatory training of all JKIA staff to improve service delivery. The CS also directed vetting of taxi drivers.

JKIA has been undergoing reorganisation and modernisation as it seeks to claim its position as a regional hub. In January, the JKIA Service Charter was signed promising to provide consistent, professional and high

quality service. 

In 2015, President Uhuru Kenyatta launched Terminal 2, which cost Sh1.7 billion, to handle 2.5 million passengers annually. The terminal was projected to increase JKIA’s capacity to 7.5 million passengers a year. “Today’s recognition shows that the measures we have put in place to improve services are beginning to bear fruit.

The benefits of all agencies working as a team are clear to see. We still have a lot to do, but I believe we are on the right track,” Kenya Airports Authority CEO Jonny Andersen said. The ACI ASQ Survey as a benchmarking programme captures passengers’ experience at all airport passenger contact points.

Credit: Star Kenya

Kenya's newly sworn-in president has announced that all Africans will be able to obtain a visa on arrival at a port of entry as he seeks to improve continental ties.

President Uhuru Kenyatta spoke to a cheering crowd of tens of thousands at his inauguration, which ends months of political turmoil that included a nullified election and a repeat vote. A growing number of African nations are making moves toward easing travel restrictions for people across the continent.

Rwanda also recently joined the ranks of African countries that are easier to visit. From 01 January 2018, nationals of all countries will be able to get visas upon arrival without prior application. South Africans will have to pay $30 (R423.61 @R14.12/$) for a visa on arrival in Rwanda.

Most recently Angola and South Africa exempted each other’s ordinary passports from visa requirements.

From 1 December 2017, citizens from both countries travelling to each other's countries will be able to enter for a period of 90 days per year, provided that each visit does not exceed 30 days in total.

African countries that area visa-free for South Africans:
Benin, Botswana, Gabon, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Saint Helena, Senegal, Seychelles, Swaziland, Zambia and Zimbabwe.

African countries that require visa on arrival:

Cape Verde, Comores, Egypt, Ethiopia, Madagascar, Tanzania, Tongo, Tunisia, Rwanda and Uganda.


Imports from South Africa grew by $107 million (Sh11 billion) in the first eight months of the year that saw Africa’s most industrialised economy overtake the United States in sales to Kenya. 

South Africa sold goods worth $414 million (Sh42.7 billion) to Nairobi in the eight-month period, a 34 per cent growth from $307 million (Sh31.7 billion) in a similar period a year earlier. The faster growth in sales saw Pretoria displace the US to emerge sixth biggest seller of commodities to Kenya.

South Africa is the most industrialised and diverse economy in the continent and is the top seller to Kenya among African countries. It sells to Nairobi goods such as wines and other alcoholic drinks, cars as well as spare parts, oil lubricants and machinery.

Imports from the US grew to Sh40.2 billion in the eight-month window, from $331 million (Sh34.2 billion), slipping one position behind South Africa on Nairobi’s import table, data from Kenya National Bureau of Statistics (KNBS) shows.


But Kenya’s exports to South Africa remain paltry, at less than $48 million (Sh5 billion) in the period with the country not featuring among the top 11 buyers of goods from Nairobi, the KNBS data shows. South African companies with operations in Kenya include MultiChoice, SABMiller, and Massmart (Game brand) while thousands of Kenyans are frequent travellers to South Africa for business and leisure.

Kenya has long expressed discomfort with the many hurdles its citizens travelling to South Africa continue to face with little response from Pretoria.

Ideally, Kenya and South Africa are supposed to be dealing with each other under the principle of reciprocity — meaning that benefits extended by one country are mirrored by the other. The KNBS data shows China remains the biggest seller of goods to Nairobi, having shipped in Sh273 billion worth of goods in the year to August, ahead of second-placed India (Sh117 billion).


Kenyan Shilling1 KES = 0.00968028 USD  US Dollar1 USD = 103.303 KES
Credit: Daily Nation Kenya

The Kenyan government recently made three policy announcements that are of great importance to maize farmers and consumers. The first was that a subsidy introduced in May 2017 to reduce consumer prices would be discontinued. Before the subsidy, prices had soared to an all-time high on the back of dwindling supplies.

The second announcement was a significant increase in the government’s budget allocation to buy maize from farmers. The third was an increase in the subsidy for fertiliser.

Earlier this year, poor domestic supply caused prices to shoot up. The government decided to allow imported maize to come in. But instead of allowing market prices to prevail, it subsidised the imports to make consumer prices cheaper, essentially subsidising consumers as well as farmers. The food subsidy reduced the price of a 2kg packet of maize flour from 140 Kenya shillings to 90, a subsidy of approximately 35%.

In ending the subsidy of imported maize, the government aims to ensure that grain millers purchase locally produced maize harvested since August 2017. The government has also signalled that it aims to purchase the entire harvest offered for sale by farmers for the strategic food reserve by allocating USD$60 million.

Increasing the subsidy for fertiliser will reduce the input costs for farmers and increase maize yields. But the overall success of these policies is likely to be mixed, especially in the short term.

The three interventions

By the time the maize subsidy was introduced in May 2017, the price for a 90kg bag of locally produced maize was about 4,500 Kenyan shillings, compared to world market prices of 1,400 Kenyan Shillings. This huge price difference is attributed to high input costs, resulting in low productivity and therefore high per unit costs.

The subsidy stabilised local consumer maize prices. But it came at a huge cost to the government, which paid out USD$67 million (6.7 billion Kenyan shillings) between May and October 2017.

Once the subsidy ends, consumer prices are expected to increase by approximately 15% based on simulations done by Tegemeo Institute, the policy research institute of Egerton University.

Adding to the upward pressure on prices is the increase in the money the government is making available to buy maize stocks. It usually buys maize at a price higher than the market price. This has the effect of raising the market price – and undermining the objective of reducing consumer prices.

Ideally, government should intervene on either the supply side or the demand side, but not both. For example, it could intervene to keep the costs of production as low as possible so that consumers would buy food at market prices. Alternatively, it could allow producers to sell at market prices and subsidise consumers who cannot afford these prices. The consumer subsidy model has been used by India and Egypt, where households are given a cash transfer to purchase food.

It has been argued that in the Kenyan model farmers enjoy a double subsidy. They get subsidised inputs and above-market prices from government. This forces millers to offer even more attractive prices to compete with government for farmers’ maize stocks. This puts inflationary pressure on consumer prices.

The USD$60 million allocated to replenish the grain reserve is significant given that for the current year the government had allocated USD$18 million (increasing the allocation by more than 400%). But it won’t mop up the current harvest. Government will buy a quantity determined by the price it offers farmers. Maize farmers have a strong lobby which has influenced the price. A high price means less is purchased. Purchasing less quantities effectively leaves the government unable to affect the price of grain by increasing supply when it falls short, a key objective of the strategic food reserve.

The government has announced that it will buy maize from farmers at Ksh.3,200 per 90kg bag. At this price, the government will buy 1.8 million bags, or only 6% of the current harvest. Monthly consumption is 3.3 million bags. The recommended quantity is three months cover. A three months cover allows the government to increase supply during when it falls short and thereby stabilise prices, while allowing time to source for more grain.

And the country will still have to import maize because it isn’t producing enough. Tegemeo Institute, assessing the food situation for maize and rice production in 2017, estimates that the maize harvest will be about 20% lower than this year. Erratic rain and an army worm infestation are the main reasons.

Usually, millers are forced to offer a price higher than the government price to purchase enough quantities for milling. For example, when the government buys maize at 3,200 shillings per bag, millers will buy at 3,400 shillings, which is 6% higher. Without the subsidy that guaranteed consumers a lower price, for which millers were guaranteed a subsidised price of 2,300 shillings, it is expected that millers will pass on much of the increase in maize prices to consumers. This will amount to 40% if they buy at Sh3,200 or 48% if they buy at Sh3,400. Therefore, to keep the consumer price unchanged, government may be forced to subsidise consumer prices or offer a rebate to millers.

The third move by the government was to lower the cost of fertiliser, offered through government subsidy.

Farmers will welcome the move. Research by Tegemeo Institute found that fertiliser accounted for about 15% of the cost of production in 2017. But, as has been shown before, there is a need to investigate how the subsidy increase will affect private-sector fertiliser markets.

Longer-term solutions

To maintain stable production and prices, the government should focus on long-term interventions that will improve productivity and lower the production costs per unit. It needs to plan better. For example, it must plan now for imports to meet the expected shortfall.

And the type of fertiliser that’s subsidised should suit local conditions. Tailored fertilisers have an effect on improving maize yields.

The ConversationWhen short-term intervention in the markets is required, it should be strategic and with a clear exit strategy. Such a response should be limited to managing shocks such as pest infestation and disease outbreaks. Currently, short term interventions seem to the only response, leading to the same challenges being repeated.


Timothy Njagi Njeru, Research Fellow, Tegemeo Institute, Egerton University

This article was originally published on The Conversation. Read the original article.

Before Kenya’s August 8 general election, opposition candidate Raila Odinga promised to be a transitional, one-term president. Uhuru Kenyatta, meanwhile, was gunning for a second and final term. Both candidates’ political legacies were at stake.

But the nullification of the presidential election has thrown Kenya into uncharted territory. It’s been made even more unpredictable by Odinga’s withdrawal from the repeat election slated for October 26.

Odinga withdrew because, he claimed, the election commission refused to meet nine demands he made as preconditions for a credible fresh election after the August 8 poll was invalidated by the Supreme Court.

The political uncertainty is having a negative impact on the country’s economy, as well as its political stability.

The hard-line positions adopted by both sides have created a deep rift between the supporters of Kenyatta’s Jubilee party and Odinga’s National Super Alliance. To make matters worse, the police have repeatedly used excessive force to contain National Super Alliance protesters who have clashed with Jubilee supporters during demonstrations.

These protests could very easily escalate into tribal violence given the ethnically divisive nature of Kenyan politics.

Election commission to blame

Kenya’s current political crisis can be attributed to the ineptness of the electoral commission. The Independent Electoral and Boundaries Commission mishandled the August 8 election. After the Supreme Court invalidated the poll, infighting among commissioners dented the commission’s image even further. The court found the commission committed grave irregularities and illegalities during the August election.

The commission has also aligned itself with the Jubilee Party. For its part, the party has often shielded the electoral body from criticism. For example it blamed the Supreme Court for invalidating the election. All this entrenches the notion that the commission is not exercising an independent mandate.

The commission has focused too much on short term political stability. It hasn’t considered the impact of another bungled election on Kenya’s long term democratic gains. It was given 60 days by the Supreme Court and the country’s Constitution to hold a second poll, and rushed into this process without any introspection.

And divisions between the commissioners are widening. One of them, Roselyn Akombe, has resigned and says the commission’s partisan nature makes it impossible for the body to hold a credible poll. Wafula Chebukati, the commission’s chairman, responded to Akombe’s resignation by saying he can’t guarantee that his team can hold a credible election.

All this suggests that the commission could make the same mistakes it did leading up to August 8 and that the second poll will also be a sham. This would drag Kenya further into political turmoil and lead to more economic strain on the country.

Immovable positions

Unlike its opposition, the ruling Jubilee party is keen to participate in the October 26 election. It even used its majority in both houses of Parliament to push through amendments to the election laws.

These amendments dilute the electoral commission chairman’s power and also give priority to manual voting over electronic processes. Confusion over manual processes played a large role in pushing Kenya into post-election violence during the contested 2007 polls.

Jubilee has not consulted widely on these amendments, and has been widely condemned for pushing through changes to election law so close to the second poll. The changes all appear to be knee-jerk reactions to the Supreme Court’s ruling, and a push to ensure Kenyatta bags a second term.

Meanwhile, Odinga and his party have maintained that elections will not be conducted on October 26. To add fuel to the political fire, the coalition he leads has escalated its weekly demonstrations to daily countrywide protests.

Political solution

The next stage of this battle is likely to play out in the Supreme Court. The National Super Alliance still has the option to return to court to either stop the October 26 poll or challenge its outcome.

But the solution to Kenya’s ongoing constitutional crisis is not legal. It is political. The country is deeply divided along ethnic and political lines. If the electoral commission goes ahead with an election that doesn’t include Odinga, the process is likely to be deemed illegitimate.

It’s obvious that the electoral commission has been captured by partisan politics. It is operating in a hostile political environment and there is enormous division in its ranks.

In the worst case scenario, Kenya could degenerate into the kind of ethnicised election violence last seen in 2007. The feeling of disenfranchisement among some ethnic communities, who have felt marginalised by successive regimes since independence, has once again emerged in public discourse.

Assessing statements made by the electoral commission in recent days it’s clear that it’s unable to hold a credible election. On the other hand another legal battle would only drag the country into further political uncertainty.

What’s clear therefore is that a political settlement is needed to reconstitute the electoral body before holding a fresh election. This might involve forming a caretaker government to give the electoral commission time to effect the necessary reforms.


Sekou Toure Otondi, PhD Candidate, Department of Political Science and Public Administration, University of Nairobi

This article was originally published on The Conversation. Read the original article.

Kenya plans to attract low-cost airlines in order to increase the number of international tourists visiting the country, a senior government official said.

Cabinet Secretary in the Ministry of Tourism Najib Balala told a media briefing in Nairobi that an increasing number of tourists are using low-cost airlines. "We are therefore developing an aviation strategy for the tourism sector that will offer incentives for low-cost airlines to begin flying into Kenya," Balala said during the Seventh Edition of the Annual Magical Kenya Travel Expo.

The three-day event will showcase Kenya's tourism destinations to overseas travel agencies. Tourism promotion agencies from Tanzania, Rwanda, and Seychelles were also represented in the conference. The east African nation had previously set aside 12 million U.S. dollars to promote chartered air travel.

"However, charter tourism is facing a lot of challenges due to the changing patterns of international holiday makers who are seeking to spend less on vacations," Balala said. 

Kenya already has a number of budget airlines operating in the country, which has helped expand the domestic tourism sector. Domestic low-cost airlines have contributed to pushing earnings of the local tourism sector to account for over 52 percent of the industry, Balala said.

He said Kenya needs to replicate the successful model of low-cost airlines to attract more foreign tourists. The country is planning to invest more in domestic tourism because it's more resilient as compared to international travelers, he said.

According to the ministry of tourism, Kenya recorded 1.3 million international arrivals in 2016. Balala noted that despite a 10 percent increase in tourist arrivals in the first eight months of 2017, overall tourist arrivals the whole year will likely fall as compared to last year due to the prevailing political uncertainty caused by a re-run of the presidential polls, now scheduled for Oct. 26.


Source: Xinhua

Kenya has registered an explosive growth in the number of TV and radio stations in about two years since the East African nation switched from analogue to digital broadcasting.

The growth has been unprecedented, with the number of TV stations rising to 66 while radio stations have doubled to 178 since 2015. The swell indicated that Kenyans now have more variety in terms of TV content and can choose from a myriad of radio stations to listen.

Besides, the growth means more jobs created in the sector, which include radio and TV announcers, technicians and journalists. "At the end of the financial year 2016/2017, the number of free-to-air TV channels on the digital terrestrial platform stood at 66 up from 60 recorded in the previous quarter," latest data from the Communication Authority of Kenya (CA) shows Wednesday.

The TV stations are mainly free-to-air as tight competition among pay TV players in the East African nation has locked out new entrants. The regulator attributed the increase to the opened space in the broadcasting sector as a result of digital TV, which has made it easy to join as all investors need to do is register their stations and come up with content, which will be carried by companies that distribute the Digital Terrestrial Television network.

The mode of operation has, therefore, reduced investment capital for investors who initially had to install transmission infrastructure across the country. 

"The increase in TV stations is mainly as a result of licensing of new entrants in the broadcasting market," said the CA in the report for the quarter ending June.

Kenya switched to digital TV in January 2015 and since then, the signal has been expanding to cover 78 percent of the population as at the end of June, enabling millions of people who were locked out of TV viewing initially to enjoy the service. During the quarter, there was extension of network coverage by some of the self-provisioning digital signal distributors to various areas, including far-flung border towns like Kapenguria, Wajir and Lamu.
The expansion of the digital signal coupled with rise in the number of TV stations from five in 2015 has made more Kenyans acquire set-top-boxes. Close to 5 million Kenyans now own the set-top boxes which they use to access the digital signal, up from less than 1 million in 2015.

"The cumulative number of digital set-top boxes purchased as at the end of June stood at 729,477 for Free-to-Air set top boxes and 3,788,417 for pay TV," the CA noted.

Similarly, the total number of active FM stations in the country has risen to 178 stations as at the end of June from nearly 70 in 2015. Like TV, the FM stations are being carried on the digital platform making it easier for investors to join the industry.

"When compared to the 139 stations recorded in last financial year, there has been a remarkable increase of 28 percent, which was as a result of licensing of new operators in market," said CA. Bernard Mwaso, a consultant with Edell IT Solution, noted that digital migration was a huge blessing for the Kenyan citizens and the sector in general.

"Though the migration was initially resisted by media owners, time has come to disapprove them as the sector has expanded exponentially. Now the industry is no longer controlled by the big corporates but even small players have a stake in it," he said. Mwaso observed that the entrance of the new TV and radio stations has led to more audience segmentation and fragmentation giving people a variety of stations and programmes to choose from.

"It is a good thing because you can now find a TV or radio station catering for farmers or news only, for instance. This is something that could not have been possible in the past," he noted, adding that a good number of stations are regional and broadcast in vernacular languages therefore addressing listeners immediate needs.


Source: Xinhua

Kenya is set to get an additional 4,000 hotel beds in the next five years as per an estimate of international and upcoming brands that have announced plans of setting up in the country.

Director of Tourism, Ms Keziah Odemba, said the coming of the international brands portends good tidings for the industry and for the country’s economy as the established brands will directly source for tourists from their niche markets thereby adding to the total visitor numbers.

Speaking during the World Tourism Day fete in Nairobi, Ms Odemba said the expected multi-billion shilling investments among them by Swiss Lenana Motel, Radisson Blu, Villa Rosa Kempinski, Golden Tulip, Amber, Ibis Styles and an array of upcoming brands such as the 64-storeyed Hilton Upper Hill among others across the country show Kenya’s tourism projections are positive.

Last year Kenya received 1.1 million tourists mainly entering Kenya for business and leisure, with 2017’s projects currently set at 1.4 million.

About 937,000 tourists were hosted on holiday, 78,000 were business travellers and a further 136,000 tourists visiting for other reasons.

Online travel marketer Jumia Country Manager Cyrus Onyiego urged passenger airlines and tourist hotels to introduce special rates to cater for local travellers.

Mr Onyiego said Kenyans were keen to travel locally but were discouraged by exorbitant fees charged by the hotels.

“It is cheaper to fly from Tanzania’s Dar es Salaam to Kigali in Rwanda than it is to fly from Nairobi to Mombasa. Hotels also need to come up with an innovative pricing model that embraces cheaper pricing for advance family bookings for locals,” he said.

Ms Odemba said Kenya continues to record high tourism arrivals due to the relative peace that has continued to prevail even after the Supreme Court annulled the August 8 presidential election results.

Tourism expert Carmen Nibigira reiterated her call to African governments to open up borders for intra-Africa travel, saying affordable air fares could be realised if governments eased all charges levied on incoming airlines as well as zero-rating of visa charges like Europe and America had done.


Credit: Nation Media Group

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