Kenya has picked Wood Group Plc, a British company, to design its oil pipeline to transport crude from fields in Lokichar, Turkana County in the north to the port of Lamu on the Coast. The announcement last week puts the oil export plan back on track towards commercial production in 2021/22. Kenya plans to build the 892-kilometre pipeline to pump the discovered commercial oil reserves in the Lokichar basin. The project cost is estimated at $2 billion. Petroleum and Mining Principal Secretary Andrew Kamau said the design work would take eight months. This will then be expected to inform the specifications of the pipeline as well as the actual cost. The EastAfrican understands that the British firm, which is listed on the London Stock Exchange, was awarded the design contract on Monday. In January, Kenya invited bids for the front end engineering design (Feed) — which helps set the technical requirements for the line — from eight firms it had shortlisted before narrowing it down to two. “We selected the eight firms from a pool of contractors that had submitted applications to be prequalified to undertake the Feed after we sent out a request for expression of interest in 2016,” said Mr Kamau. The environmental and social impact assessment (ESIA) started last month as planned, putting into motion the country’s push to have its own pipeline after the original plan for a joint project with Uganda flopped when Kampala looked South to Tanzania in 2017. “The firm has been tasked...

Kenya, Tanzania and Uganda are still squabbling over the implementation of the Common Market provisions, despite officials saying a lot of ground has been covered in resolving the issues. This came as Kenyan sugar-based products were denied preferential access to Uganda and Tanzania over the application of the Rules of Origin. For the fourth consecutive month, Cerelac, juice, ice cream and chewing gum from Kenya could not get preferential access to the Tanzanian market. A month ago, Uganda denied Kenyan confectionaries preferential access, arguing that Common External Tariff (CET) should be levied on the products since they were manufactured from industrial sugar imported under a 10 per cent duty remission scheme. Citing a 2017 legal notice, where Kenya was granted duty remission on raw sugar at a duty rate of 0 per cent for one year to manufacture sugar for industrial use, Tanzania is demanding full CET duties of 25 per cent on the products instead of the free access granted to products that meet the EAC origin criteria. However, Kenyan manufacturers argue that the products are not made from raw sugar but rather from industrial sugar imported under the EAC wide duty remission, which attracts 10 per cent levy. The Kenya Revenue Authority (KRA) argues that only one Kenyan company, which was supposed to produce refined sugar, benefited from the provision for imports under the 0 per cent levy. The firm has yet to utilise to the opportunity. “The denial of entry for Kenyan goods into Tanzania continues despite KRA’s...

East African governments are betting on modernising their ports to ease transportation bottlenecks and compete for the regional maritime business. On Monday, Tanzania announced that construction of the $10 billion Bagamoyo port begins in June, setting the pace of the country’s ambitious plan to have one of the most modern ports on the continent. Kenya also announced that it had picked Toyo Construction Co Ltd of Japan for a $319 million Mombasa port container-terminal expansion project starting soon. Djibouti, which has in the past three years inaugurated three new ports worth more than $650 million, had earlier announced that it was in talks with French shipping company CMA CGM to develop a $600 million new container terminal in its biggest port Doraleh, as seeks to become the region’s transport hub. Djibouti’s race to modernise its ports has shifted focus from Mombasa and Dar ports, especially after Ethiopia unveiled an electric Standard Gauge Railway early this year to ease the movement of goods to and from the country’s port of Ghoubet, which serves as the main gateway for exports from Ethiopia — handling ships of up to 100,000 deadweight tonnes. Special economic zones The country’s port upgrades, it says, is part of its four mega ports projects “aimed at providing world-class logistics platforms for shipping…with world class facilities will vastly improve the efficiency and ease of doing business in the Horn of Africa.” Its latest container terminal upgrade at the strategically located port of Doraleh, which connects Asia, Africa and Europe,...

Nairobi. A fresh round of trade wars is simmering in East Africa after Tanzania and Uganda imposed taxes on Kenya made confectionery products like chocolate, ice cream, biscuits and sweets citing use of imported industrial sugar in the goods. The two states have rejected certificates of origin issued by the Kenya Revenue Authority (KRA) and opted to levy 25 per cent import duty on Kenyan confectioneries. Acceptance of the certificate-- a document showing where a good has originated so as to determine the import duty chargeable — guarantees Kenyan goods tax-free entry into Uganda and Tanzania. The East Africa Community common market is made up of Tanzania, Kenya, Uganda, Rwanda and Burundi allows free movement of locally manufactured goods within the bloc. Tanzania and Uganda revenue authorities have, however, accused the Kenyan manufacturers of tilting competition in their favour by using industrial sugar imported under a 10 per cent duty remission scheme. The region does not produce industrial sugar. Last week, Kenyan firms accused Uganda and Tanzania of using the customs taxes to restrict trade in East Africa. “This is an EAC-wide remission scheme that is available to all manufacturers in the region,” said Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga. “We are not supposed to pay duty when we sell in the region because our competitors in the region also rely on industrial sugar imported under the same remission scheme.” KRA has come to the defence of Kenyan firms saying confectionery products made of industrial sugar imported under...

The World Bank says 18 sub-Saharan African countries are at "high risk of debt distress" in 2018 compared with just eight five years ago. The World Bank’s Pulse report doesn’t name the 18 but a report in TheEconomist says Kenya is among the 18 countries where government debt is above 50 per cent of GDP. The bank has also expressed concern that tax receipts are not meeting the cost of debt repayments in several countries. It warns that the consequences may be severe if action is not taken to address the issue in the coming years. This is because from 2021 international bonds start maturing and large repayments pose “significant refinancing risks” to the region, the bank says. Public debt rising The World Bank says that public debt relative to GDP is rising throughout most of sub-Saharan Africa, and the composition of debt has changed. More countries have shifted away from traditional concessional sources of financing toward more market-based ones. From 2013, the dynamics and composition of public debt changed significantly. Public debt increased from an average of 37 per cent of gross domestic product (GDP) in 2012 to 56 per cent in 2016, with more than two-thirds of the countries experiencing an increase of more than 20 percentage points. Debt sustainability risks in the region “have increased significantly” over the past few years, the report says. “Higher debt burdens and the increasing exposure to market risks raise concerns about debt sustainability,” the report says. Eighteen countries were classified at...

Shippers have started embracing the Through Bill of Lading (TBL) freight model to import goods into the country, which is expected to increase cargo being transported via the Standard Gauge Railway trains. Last week, Maersk Line delivered a freight train loaded with 108 TBL containers to the Nairobi Inland Container Depot (ICD) in a move expected to resolve the issue of returning empty containers. For goods to be delivered to a destination, the importer has to state the port they want their cargo offloaded. In the TBL, the point of destination is the ICD and not Mombasa port as is the practice currently with the merchant haulage model. The TBL model will ease the burden of repatriating empty containers which are required to be returned to designated yards in Mombasa. When freight trains started operating in January, the Kenya Railways and Kenya Ports Authority (KPA) railed containers meant for offloading at the port to the ICD, complicating logistics for importers who had to hire trucks to transport empty containers to Mombasa, incurring additional costs. But with the TBL, importers will now return the containers to the ICD. Maersk Line Eastern Africa Managing Director Mads Skov-Hansen said the direct link between Mombasa port and the ICD in Nairobi offers alternative solutions to transport cargo to trade partners in key inland markets. “Moving goods shipped by Maersk Line to Mombasa onward through inland corridors in a timely and efficient manner is crucial to our customers. Solutions to transport massive cargo volumes quickly,...

Expansion of the port of Mombasa over the past four years has enabled it to handle larger volumes of cargo, making the facility attractive to big global shipping lines. The Kenya Ports Authority (KPA) says the “vast improvement” in the efficiency of operations is another major reason the facility has caught the eye of larger vessels. Two weeks ago, the port received a container vessel Mv Spero, operated by Hapag-Lloyd, a German shipping company, marking the firm’s start of operations to East Africa. Hapag-Lloyd is the world’s sixth largest container carrier in terms of vessel capacity and currently, six of the top 10 container shipping lines are now calling at the port. These are Maersk, Mediterranean Shipping Company, CMA-CGM, China Ocean Shipping Company (COSCO) and Evergreen Shipping line. “The fact that more shipping lines are calling at the port is a manifestation of the confidence the global shipping and business community has in the Mombasa port,” says KPA Managing Director Catherine Mturi-Wairi. She attributed this to a raft of reforms achieved under the Mombasa Port Development Programme (MPDP). The MPDP kicked off in 2005 as part of the actualisation of a 25-year Port Master Plan that focused on capacity enhancement in the wake of growth in cargo volumes. Another component of the MPDP is application of modern technology in the port’s procedures. “Implementation of this programme has continued to increase efficiency in operations, reducing ship turnaround time from 4.9 days a few years ago to 2.5 days. Container dwell time...

The construction of a new transit shed at the Jomo Kenyatta International Airport (JKIA) is ongoing in a plan aimed at expanding the facility’s cargo handling capacity by more than 10 per cent. The expansion will take the number of transit sheds to six. The move has been triggered by the rising air cargo competition from Ethiopia and South Africa, as well as the rise in exports, especially horticulture. A report released last week by the Fresh Produce Consortium of Kenya (FPC Kenya) shows that the sales of fresh produce increased to reach Sh115 billion in 2017, from Sh101.5 billion in 2016, with flower exports contributing Sh82.24 billion, up from Sh70.83 billion the previous year. In a bid to handle the increased tonnage of horticulture, which is one the country’s major exports, the Kenya Airports Authority (KAA) is enhancing its exit and import handling capacity by 10,000sqm. “We have five transit sheds at the airport which deal with the facilitation of cargo; imports and exports at the JKIA. The additional facility, called Mitchell Cott, should be ready by September thus making them six,” said Evans Michoma, KAA Commercial Cargo Manager. “This will add the capacity of our uplifts for cargo facilitation at the airport.” Currently, the handling capacity at the airport is a million tonnes annually. This is expected to rise by 150,000 tonnes a year once the new transit shed is completed. In a week, one transit shed can handle about 800 to one million kilos in exports, according...

Tanzania has rejected Kenya Revenue Authority (KRA) backing of locally made goods in a fresh trade spat that has seen Dar es Salam impose barriers on confectionery products like chocolate, ice cream, biscuits and sweets. Tanzania slapped a 25 per cent import duty on Kenyan firms citing the use of imported industrial sugar in the goods. It has ignored evidence from KRA indicating the share of imported sugar in the Kenya- made goods was within the levels that grant the products tax-free passage to Uganda and Tanzania. The East Africa Community (EAC) common market made up of Tanzania, Kenya, Uganda, Rwanda, South Sudan and Burundi allows for free movement of locally manufactured goods within the bloc. “The denial of entry for Kenyan goods into Tanzania continues despite KRA’s intervention to clarify the matter to its Tanzanian counterpart,” Kenya Association of Manufacturers said on Thursday. “KRA has provided detailed information with evidence that manufacturers of above affected products, import industrial sugar for tariff number 1701.99.10.” Tanzania and Uganda revenue bodies have, however, accused the Kenyan manufacturers of tilting competition in their favour by using industrial sugar imported under a 10 per cent duty remission scheme. The region does not produce industrial sugar. Last week, Kenyan firms accused the two countries of using the customs taxes to restrict trade. “Despite these and other multiple attempts, Tanzania has continued to bar Kenyan products and has additionally denied the delivery these goods under bond,” KAM said, adding that the move had forced Kenyan firms...

The value of tea neared a three-year low as poor prices continue at the auction amid increasing volumes. In the latest sale, a kilo on average fetched Sh247, down from Sh253 in last week’s trading at the Mombasa auction. The Tea Directorate had projected volumes would rise and that this was likely to affect the price. But a market report by East African Tea Traders Association indicates the volumes offered for sale this week increased by 931,362 kilos, marking the first time volumes have grown in the last one month. The auction had started on a high of Sh270 in the first sale of the year but the prices have been falling in the last three months. This has prompted the directorate to mull conducting investigations into underlying factors affecting the value of the commodity following a sustained poor performance. For the last nine weeks, the price of tea at the auction has been declining, raising concern among stakeholders. Tea production for the month of February was 27.93 million kilos against 22.60 million kilogrammes recorded during the corresponding month of 2017, according to the directorate. The increase in production was largely attributed to rains experienced in the West of the Rift that saw the region’s output rise from 12.23 million to 18.65. Source: Business Daily