London-based oil explorer Tullow on Wednesday said it had pumped additional $2.9 billion (Sh293 billion) into the operation targeting full-scale export of Kenya’s oil to begin in four years’ time. Tullow, which has already spent more than $1 billion (Sh101 billion) in exploration activities over the past six years, said in a trading update that it plans to invest the additional amount in the development of the oil fields and the building a pipeline linking Turkana to Lamu. “After over six years of hard work, we can now move forward to commercialising these low-cost resources through a phased development of the basin involving a central processing facility and an export pipeline to the Kenyan coast,” Tullow’s executive vice president for East Africa, Mark MacFarlane, said in a statement. Tullow says the gross capital expenditure is estimated at $2.9 billion (Sh293 billion) comprising a $1.8 billion (Sh182 billion) upstream investment and $1.1 billion (Sh111 billion) for the 750-kilometre pipeline. The multinational’s full-blown commercial operations will build on the government’s early oil pilot scheme, which is expected to see the country begin small-scale exports later this year. Tullow’s massive capital expenditure is a signal of the oil revenues that will be eaten up by the capital-intensive business since the company is entitled to recover its expenses over the years. The government has moved to hire an independent firm to audit Tullow’s expenses. The move to full commercial operations is expected to give a significant revenue boost to State coffers, especially if the...

The International Air Transport Association (IATA) has urged governments to urgently address the infrastructure challenges airlines face to secure the industry’s future. Alexandre de Juniac, IATA’s director general and CEO, said there are worrying infrastructure gaps, which are increasing operational costs and, thus affecting the profitability of the sector. The official also advised governments against privatisation of airport infrastructure, saying such a move would “eat into” the sector’s profitability. “We have not found the correct regulatory framework to balance the interests of investors to get profits with the public interest for the airport to be a catalyst for economic growth,” he said. In a statement, De Juniac highlighted the need to build infrastructure “robust enough to meet the high standards of airline operations and passenger convenience”. This comes at a time when government of Rwanda is seeking to establish new regulations governing civil aviation in the country to help make it more efficient. Minister of State for Transport Eng Jean de Dieu Uwihanganye told Parliament on Monday that the new regulations will improve the way Rwanda investigates aircraft incidents and accidents. Uwihanganye said the proposed regulations will also enable the national carrier, RwandAir, to enter new markets in Europe and America “with ease because the new aviation rules are in line with standards requirements in Europe and the US. The draft law empowers the Minister for Infrastructure to conduct aircraft accident investigations, among other things, and also outlines how Rwanda will work with other organisations and governments to investigate the...

Last week, Tanzania’s industry, trade and investment permanent secretary Elisante Ole Gabriel was in Kenya again for what is becoming a periodic bilateral ritual. Prof Gabriel and Kenya’s trade Principal secretary Chris Kiptoo signed a deal to eliminate non-tariff barriers (NTBs). A keen observer should by now have lost the count of how many times the two countries have signed such pacts in recent months. Perhaps the only new thing this time round was the choice of Mombasa as venue. Otherwise, they have been reached before at the levels of trade lobby groups, PSs, ministers and even between President Uhuru Kenyatta and Tanzania’s John Magufuli. A hint of the official inertia can be gleaned from the same list of pending disputes. They include multiple levies, inspection fees, failure to grant preferential treatment, slow customs procedures and slow implementation of the East African Community (EAC) directives. Trade has always been based on a country’s comparative advantage.  A country is supposed to concentrate on what it can produce efficiently for export. In East Africa where countries produce identical primary goods and rely on same manufacturing technology, it is the NTBs and not the usual competition parameters like price and quality that determine survival. Secondly, people will always buy what they cannot produce. That explains why Kenyans will always import more from South Africa with whom we share no common market. In short, NBS are here to stay. Back to list of disputes brought before Dr Kiptoo and Prof Gabriel. The failure by...

Last week, a Cabinet secretary appeared to find nothing awkward in importing tilapia as long as there was a shortage and that import taxes were paid. This, I thought, was an unfortunate statement coming at a time the government was launching the four-pillar development plan that includes food security. The CS’s opinion was also insensitive to the fish sub-sector stakeholders who appear convinced that these imports, mainly from China, are significantly threatening their enterprises. A lot of convincing is needed that indeed our lakes, the Indian Ocean economic zone, and fish-farming cannot meet local demand for fish. However, if indeed there is a genuine shortage of fish, then we have a serious problem with the promotion and husbandry of the fisheries sub-sector. The CS should have explained the steps, if any, that the government is taking to ensure that local demand for fish is met while also planning to produce surpluses for exports through value adding processing. The tilapia case study is a perfect example of how unrestricted imports can make it difficult for the government to achieve food security and agro-industries goals. Tough and resolute decisions on protection of local production from imports will have to be made if we are to deliver food security, value adding processing and jobs. In this respect let us not shy away from borrowing from the US President Trump’s recent expedient trade actions to restrict imports which he believes are impairing US local production and jobs creation. If we do not restrict imports...

China is funding a quarter of large-scale construction projects in eastern Africa, cementing Beijing’s ascendancy in the region’s economic diplomacy at the expense of traditional allies like the United States and the European Union. The latest Deloitte Africa Construction Trends Report 2017 shows China is bankrolling 25.4 per cent of the mega projects in the region. The Asian tiger is followed by international development finance institutions like the World Bank, which comes in second at 19.7 per cent. African development finance institutions like the African Development Bank (AfDB) are ranked third at 15.5 per cent while funds from private domestic sources stand at 4.2 per cent. The EU accounts for 8.5 per cent while single countries contribute seven per cent, with the US trailing at a paltry 2.8 per cent. “China is the most prolific funder of large-scale construction projections in East Africa financing one in four projects in the region,” says the report released in Nairobi on Tuesday. Deloitte Africa infrastructure and capital projects leader Jean-Pierre Labuschagne linked the rise of Beijing in the region to a cocktail of geo-politics as more EAC nations look east and abandon their traditional partners in the search for new markets by the resource-hungry Asian behemoth. “You have a Chinese economy that is booming, possibly flattening a little bit because of the world economy and so they are looking to export those services and expertise,” Mr Labuschagne told the Business Daily. “I do think there is also an element of a political statement behind...

Tanzania’s current gas exploration and mining is billed to be at the top of agenda, as Kenya is being ranked a major oil exporter before the year 2020. The event (June 14 – 15, 2018) at the Intercontinental Hotel will also celebrate its fifth anniversary as the most prestigious oil and gas summit in East and Central African region. The Summit will significantly address onshore oil discoveries in Uganda and Kenya and offshore gas discoveries in Tanzania and Mozambique, developments that have made East Africa a subject of intense interest among the global energy industry. “The speed at which governments in East Africa are developing hydrocarbon reserves is a clear indication of their will to cement the region’s reputation as the new hotspot in hydrocarbon exploration and production,” reads a statement from the Summit organisers dispatched to Arusha last week. President John Magufuli has since ordered that exploitation of natural gas begin “as a matter of urgency” while Kenya’s President Uhuru Kenyatta announced his government’s plans to bring forward the country’s oil production deadline by two years and ‘set a path’ that would enable the country to become a major producer and exporter by 2019. The Early Oil Pilot Scheme (EOPS) Agreement between the Joint Venture Partners and the Government of Kenya was signed on March 14, 2017, allowing all EOPS upstream contracts to be awarded. The EOPS production of 2000 barrels per day is expected to commence around the end of the year. “Africa Oil Corporation is society and...

Kenya has embarked on the task of upgrading its newly-built standard gauge railway (SGR) line to electric status following the signing of a financing deal with a Chinese company. The Kenya Electricity Transmission Company (Ketraco) signed the $240 million with China Electric Power Equipment and Technology Company on January 25, paving the way for work to begin. The task is to convert the line from its current diesel-driven status to an electricity-driven line — enabling it to make a switch to use of clean energy. About 14 power substations will be constructed to serve the Mombasa and Nairobi segment of the line which is expected to run through Uganda into Rwanda. Ketraco’s task is to ensure reliable and sufficient supply of electricity not only for the train but also other facilities along the Mombasa-Nairobi economic belt such as train stations, factories and businesses near the railway. It is expected to create a market for major power consumers along the railway line and open other opportunities for the locals. Technically, SGR is ready for the upgrade because though initially designed to run on diesel-powered locomotives, it allows addition of a single electric line that will be connected to Ketraco’s 482-km 400kV Mombasa-Nairobi transmission line. The line, which is the longest and highest voltage transmission infrastructure in East Africa, has a transfer capacity of 1,500 megawatts, which is only 200 megawatts shy of the current national demand of 1,700 megawatts. The line was constructed to address the challenges of low voltage, high...

Mombasa tea auction will be automated by the end of the year, bringing to an end the old manual system that has been in use for decades. East African Tea Traders Association (Eatta) managing director Edward Mudibo said they are currently procuring a software developer, a process expected to come to end by Thursday. Mr Mudibo said the successful bidder will be awarded the contract by March this year to commence the process of automating the world’s second largest auction. “Procurement of software developer has started and is coming to an end this week. We expect the works to start in mid-March with the auction expected to be fully automated by December,” said Mr Mudibo. Trade Mark East Africa (TMA) approved a grant of Sh150 million to Eatta in 2015 for use in automation. The e-auction is expected to improve efficiency and effectiveness of the process used in trading of tea in the African region by developing an automated trading platform that will cut down on the time taken to complete a trading cycle. Source: Business Daily

The Kenya office is the first business presence in Africa. The Nairobi office, which began operations in August 1, 2017, offers a one-stop service from procurement logistics, optimizing logistics required in product manufacturing processes, to distribution logistics. Nippon Express has been using local agents to export roses and other cut flowers grown in Kenya. The firm says it will be putting in place a structure to meet the needs of customers in Kenya and the rest of East Africa, where continued growth is anticipated, moving into the African market as part of its efforts to further extend its global logistics business. “A standard-gauge railway connecting Nairobi with Mombasa was opened in June 2017 and, with transport by freight train now available, logistics demand is expected to rise due to the reduction in time and cost for transport inland from Mombasa Port,” the firm said in August 2017. The investment comes after the 6th Tokyo International Conference on African Development held in Nairobi in August 2016, where the Japanese government announced its intention to make available a total of Sh3 trillion in both public and private investment over the three-year period 2016-2018, prompting a growing number of Japanese companies setting up operations in Africa. Source: Capital FM

The government’s unilateral decision to transport all imports coming in through Mombasa port on the standard gauge railway (SGR) to Nairobi’s inland container depot (ICD) in Embakasi has renewed debate on sustainability of the railway project. Importers who had not specified the final address of their cargo became the first casualties of the directive, which essentially locks out truckers in favour of the SGR. The Kenya International Freight and Warehousing Association (Kifwa) last Friday wrote a strongly worded letter to the Kenya Ports Authority (KPA) management, protesting the purported issuance of a directive forcing its members to use the SGR. “We were shocked to be informed this morning that on government directive your authority has stopped nominations of CFSs from Monday this week and that all un-nominated containers consigned to importers upcountry have to be railed to ICD Embakasi by SGR for final clearance,” Kifwa secretary- general Ahmed Shimbwa, said in a letter to the KPA managing director. “Whilst our association is fully supportive of SGR becoming a success we … must point out that any business given to SGR should be on a voluntary basis i.e. ‘willing buyer willing seller’ and not by force.” It has also emerged that the government has also stopped importers from choosing their cargoes’ destinations going forward, meaning some cargo that is not meant for inland transport could end up in Nairobi at the importer’s cost. Phase One of the SGR, which covers the Mombasa-Nairobi section is being built at a cost of Sh447...