Monday, 27 October 2014

Construction of Bagamoyo Port begins in 2015

Construction of a Chinese-funded port and special economic zone in Tanzania worth at least $10 billion will start in July 2015, the president's office said in a statement on Monday, for the first time setting a start date for the delayed initiative.

 The construction of Bagamoyo Port begins in July 2015. The proposed port is locatedat Bagamoyo, 75 km (47 miles) north of commercial capital Dar es Salaam.
A construction agreement for the port and associated zone was signed on Sunday and follows a framework deal signed last year. An official said a start date for building work had taken time to set because of other negotiations about infrastructure to link the port to national transport networks.
The planned Bagamoyo port, new investment in Dar es Salaam and other spending on roads and railways are part of Tanzania's efforts to become a transport hub that could challenge the dominance of Mombasa in neighbouring Kenya.
"The Tanzanian government signed a memorandum of understanding with two major international institutions ... to develop the Bagamoyo economic zone," Tanzania's presidency said in a statement, adding construction would start on July 1 next year.
Tanzania said it signed the infrastructure development agreement with port developer China Merchant Holding International (CMHI) and Oman's biggest sovereign wealth fund, the State General Reserve Fund (SGRF).
Tanzanian President Jakaya Kikwete witnessed the signing of the agreement in Shenzhen, southern China.
A framework agreement between Tanzania and the Chinese port operator was signed when Chinese President Xi Jinping's visited the African nation in March 2013.
Li Jianhong, executive chairman of China Merchants Holdings, asked Tanzania's government at the signing of the construction contract to remove obstacles that have delayed implementation.
"We will do everything possible to ensure that this project takes off because it will bring enormous economic benefits to the entire country," President Kikwete said in the statement.
Separately, Tanzania and China on Oct. 24 signed deals with Chinese firms worth more than $1.7 billion, including one to build a satellite city to ease congestion in Dar es Salaam, deepening Beijing's ties with east Africa.
China, which built a railway linking Tanzania and Zambia in the 1960s and 1970s, is financing a $1.2 billion, 532 km (330 mile) natural gas pipeline. China's Sichuan Hongda Co Ltd in 2011 signed a $3 billion deal with Tanzania to mine coal and iron ore

Wednesday, 22 October 2014

East Africa neighbours close to picking consultant for oil export pipeline

KENYA, UGANDA and Rwanda are in the final stages of deciding on a consultant to oversee building a pipeline to pump the region's new oil bonanza to the coast for export, a senior Kenyan energy ministry officials said on Thursday.

In June, the three countries invited bids for a consultant to oversee a feasibility study and initial design for the construction of a 1,300-km (808-mile) oil pipeline to transport crude to the Kenyan coast.

"We are in the final stage of negotiating with the consultant who will do a feasibility study and the front end engineering design for a crude oil pipeline which should run from Hoima to coastal region of this country," Joseph Njoroge, principal secretary at the Ministry Energy and Petroleum told an east African oil and gas conference.

"Very soon, early next month," Martin Heya, commissioner of petroleum at the same ministry said of the award timing.

Njoroge said the consultant would be required finish the study within five months of the award.
In addition to the pipeline, the consultant would be required to supervise the construction of a fibre optic cable from Hoima in Uganda through the Lokichar basin in northwest Kenya to Lamu, and tank terminals in Hoima, Lokichar and Lamu.

The project will also involve the construction of a 9-km pipeline from the Lamu tank terminal to an offshore mooring buoys.

Kenya's energy ministry said earlier this year the aim of having a single consultant for the whole project was to ensure consistency in the quality of the whole pipeline.

East Africa has become potentially lucrative for international oil firms after Kenya and Uganda's commercial oil finds and discoveries of gas off the coast of Tanzania and Mozambique.

Tullow Oil and Africa Oil, which control blocks in Kenya, have estimated discoveries in the South Lokichar basin at 600 million barrels, a level experts say is enough to make a pipeline viable even without Uganda.

In neighbouring Uganda, the government estimates its crude reserves at 6.5 billion barrels.

Njoroge put the estimated crude oil recoverable reserves at about 1 billion barrels from the tertiary Rift Valley Basin, and about 1 trillion cubic standard feet of natural gas in the Anza Basin, and about 750 billion cubic feet of gas in the Lamu Basin, all in Kenya.

 By Reuters

Thursday, 25 September 2014

The corrupt fuel violence in Kenya

CORRUPT businessmen and politicians have been fanning insecurity in Kenya. They use violence as a red herring to divert attention from corruption to insecurity in a bid to cover their trucks or to blackmail the government into stopping criminal investigations. A case in point is the violence in Lamu County in June and July this year.

 Corrupt characters had grabbed huge tracts of land- to be precise- some 500,000 acres of public land.  The land covers much of the area set aside for the proposed   US$23 billion Lamu Port-South Sudan - Ethiopia transport corridor, LAPSSET.  The land is public land occupied by squatters. The grabbers therefore hired goons- who pretended to be Al-shabaab militants- to violently evict them.

This opened a Pandora’s Box.  Investigations into the cause of the violence unearthed the scandal.  The land grab was executed by 22 entities that grabbed 500,000 acres in 2011/2012. It is note worth that that was the period immediately preceding the general election in Kenya in 2013. Kenya’s President Uhuru Kenyatta pulled fast and bold one on the avaricious:  He shocked the nation by announcing that just a group of 22 entities, had grabbed some 500, 000 acres of public land in Lamu County. The president ordered the repossession of the land and also investigation with a view to prosecuting the culprits.

The presidential announcement solved a paradox: Lamu is a sparsely populated County, where population density is just sixteen per square Kilometre: Why does the region suffer landlessness and violence related to land ownership?  Now 500,000acres of land measures some 2000 square kilometres. This is enough land to accommodate some 32,000 people.  This means that the 22 well-healed land grabbers displaced some 32,000 people.

The land is a prime piece of real estate considering that it borders the site of the proposed US$25 billion Lamu Port south Sudan Ethiopia transport (LAPSSET) corridor. This corridor’s developments include the Lamu Mega Port on 9000 hectares of land, a 2000km high speed Railway line, a Crude Oil pipeline, a120, 000bpd Crude oil refinery, a highway  a resort city and an economic zone.
 The Port will also be at the head of the equatorial bridge, a Railway line connecting Lamu Port on the Indian Ocean to Douala port in Cameroun on the Atlantic Coast. This makes the land a real gold hence a prime target for grabbing.  LAPSSET will turn the backwater Lamu County into a bustling energy and logistics hub in east Africa thus increasing demand for land and consequently pushing up its price.

Construction of the first three berths begins in the 32-berth port was proposed to begin this month hence the urgency to evict the squatters.  At least 100 people were slaughtered in an orgy of violence lasting about three weekends.

 The predators according to intelligence reports were business men and politicians from both the coast and up country.  A majority appears to be members or supporters of the opposition party, ODM, which is an affiliate of the CORD coalition, the official opposition party in Kenya. One of the kingpins of the opposition, Siaya senator James Orengo was the Minister in charge of Lands in 2011/2012 when the land was dished out.  Orengo is a Member of the Opposition CORD coalition led by Raila Odinga who was the Prime Minster in the last coalition government.  He and Orengo are also at the fore front of change the Constitution Movement. Ironically, among the issues they want voted for is Corruption and insecurity. He has already recorded a statement with the Police over the land grab.
 The corrupt are adept creating smokescreens and red herring s to cover up its shenanigans. For instance, when the violence broke out in Mpeketoni in Mid- June, the government blamed local political networks.  The opposition led by Raila Odinga, stopped short of calling the President an idiot insisting that the violence is perpetuated by the Somali militant group-Al- Shabaab. Interestingly, the Somalia based Al-shabaab militants “claimed responsibility for the carnage.”  However, a person suspected to be an ODM supporter, was later arrested for using a fake Al-shabaab twitter account to issue the said admission.

 The admission by Al-shabaab was puzzling; the Militants are under siege, nay on the run, in Somalia.  Few thought they have the stomach to attack targets across the borders.   The land scandal has blown the cover on the avaricious in Kenya.

A part from displacing people from their land and therefore their daily economic activities, the violence has devastated the tourism sector.

The coastal economy is largely depended on tourism.  The sector, which was just emerging from bad business caused by uncertainties associated with last year’s elections, is now back in the doldrums. Travel advisories by western source markets have emptied the white sandy beaches of tourists.
The industry employs some 500,000 people directly and millions others indirectly.  These jobs are at stake.  Hotels have already declared a significant proportion of these employees redundant.  The national economic growth rate which is forecast at 5.5 to per cent this year is also threatened. The crisis in the tourism sector could shave off up to one per cent off the forecast growth. Last year, the decline in tourist numbers shaved off 0.7 per cent of economic growth.

It is perhaps this realisation that informed the bold move by the government to cancel the title deeds and repossess the land. In addition, to stop the bloodletting and hemorrhage of the economy, the government sent the military to hunt down the criminals with a devastating effect.

Intelligence reports indicate that a large number of the criminals were killed in security forces’ raids on their hideout in the expansive Boni forest. If government sustains its aggressive stance on crime, insecurity will decline. In fact, in august, insecurity was down significantly.

Tuesday, 16 September 2014

East Africa’s EOI for Pipeline extension

Kenya, Uganda and Rwanda have invited EOI (Expression Of Interest) to build a 784-kilometre pipeline to transport while petroleum products. The project, to be built in in two phases will transport refined petroleum products from Kenya to both Uganda and Rwanda.
The project, part of east African regional integration plans, involves extending an existing pipeline that runs from the Kenyan port of Mombasa and the western town of Eldoret.

The extension will link that pipeline to Kampala and Kigali and also serve markets in Tanzania, Burundi, South Sudan and the Democratic Republic of Congo. Products now have to be trucked by road.

Uganda and Kenya have discovered commercial quantities of oil and plan to start production in about three years. Those finds are among a series of discoveries along Africa's eastern coast and Rift Valley which runs through Kenya and other states.

As well as exporting crude, Uganda plans to refine some oil, making products that could flow through the pipeline extension. Plans include modifying the existing pipeline, which pumps products from the coast inland, so products can flow both ways.
 Interested parties should submit the bids by Sept. 30.

 The advertisement does not have a price tag. However, previously the tag was estimated at $300 million.

The existing products pipeline is owned and operated by the state-run Kenya Pipeline Company (KPC).

The extension would be built in two phases, comprising a 350-km stretch between Eldoret and Kampala and a 434-km pipeline between the Ugandan capital to Kigali.  It also includes construction of storage terminal at Kampala, Mbarara and Kigali.

Separate to the products pipeline, Kenya, Uganda and Rwanda invited bids in June for a consultant to oversee a feasibility study and initial design for a 1,300-kilometre oil export pipeline to the Kenyan coast. 

Tuesday, 9 September 2014

EOI call for Kenya's oil jetty

Kenya's National Oil Corp has floated an EOI for a project adviser  for a new oil jetty in the port city of Mombasa.

 The tendedr, published on Monday, NOCK invites firms to submit expressions of interest by Sept. 29 to act as adviser for the Public Private Partnership (PPP) project.

"The successful candidate will  review the original feasibility study to cater for the oil discoveries which have made Kenya a potential oil exporter.

 The initial plans unveiled in 2012 for the oil jetty, or single buoy mooring, and storage facilities were pushed back to change the scope and design after oil was found in Kenya. The initial plan was to cost some US$500 million.

"We originally envisaged to work with a specific jetty design as a net importer of oil but that changed because of the discovery of oil deposits in Kenya in 2012," NOCK spokesman Temesi Mukani  told Reuters.

The tender document said the project aimed to ensure the port was more efficient, cut delays and made Kenya's coast a competitive choice for oil tankers. Another objective is to "provide the infrastructure that will support east African states to export their discoveries to global markets".

The main export route discussed up until now for Kenyan and Ugandan oil, both still a few years from major production, would be via a planned pipeline in north Kenya to a new port at Lamu.
Kenya is under pressure to boost storage facilities and develop a strategic reserve to stabilise petroleum supplies. The country has no strategic reserves and relies on oil marketers' 21-day reserves required under industry regulations.

Crude has also been found in next door Uganda, part of a string of hydrocarbons finds along Africa's east coast and the Rift Valley that passes through Kenya and neighbouring states.

Fuel prices have a big impact on inflation in the east African nation, which relies heavily on diesel for transport, power generation and agriculture, while kerosene is used in many households for cooking and lighting.

Wednesday, 3 September 2014

Kenya Bourse's IPO oversubscribed

NAIROBI, Sept 3 (Reuters) - The Nairobi Securities Exchange (NSE) has raised 627 million Kenyan shillings ($7.1 million) for expansion in an oversubscribed initial public offering as part of plans to demutualise the bourse.
Demutualisation is seen as a way of curbing the influence stockbrokers have over the exchange's management, which has been criticised for reacting slowly to breaches in regulations.
The funds raised will be used to develop new products such as derivatives, exchange-traded funds and Sharia-compliant indexes, NSE Chief Executive Peter Mwangi said in a statement late on Tuesday.
The completion of the IPO makes the NSE the second African exchange after the Johannesburg Stock Exchange to be demutualised and transition from a private, mutual company to a public, listed company.
The NSE had said it was seeking to raise 627 million shillings by selling up to 66 million new shares at a price of 9.50 shillings per share. Investors applied for 504,189,700 new shares worth 4.8 billion shillings garnering a subscription of 764 percent, and an over subscription of 664 percent.
The new shareholders will be able to trade their NSE shares next Tuesday, the NSE said.

Following the listing - planned since 2005 - the NSE shares will trade like any other company on the bourse.

Friday, 29 August 2014

Uganda Lifts Oil Reserves

UGANDA has revised upwards  to 6.5 billion barrels after an appraisal that also showed commercial deposits of natural gas, officials said.
The east African country discovered commercial hydrocarbon deposits in the Albertine rift basin that straddles its border with the Democratic Republic of Congo in 2006.
Production has been repeatedly delayed since then by contractual disagreements, tax disputes and infrastructure setbacks and is now expected from 2017.
In a speech seen by Reuters on Friday, Ernest Rubondo commissioner for the energy ministry's Petroleum Exploration and Production Department, said only 40 percent of the basin had been explored so far and that estimated recoverable oil stood at 1.4 billion barrels.
Production of the discovered oil could last 20 to 30 years, and even more oil could be found, Rubondo said.
"Since additional exploration and appraisal is expected ... this could lead to additional resources being discovered in the country, hence prolonging the production period," Rubondo said.
Rubondo said Uganda was preparing for "open competitive licensing rounds" for the remaining acreage in the basin, but did not yet have a time frame for the process.
Ugandan officials say they aim to get better terms from explorers in future oil deals now that the country's exploration risk has been diminished by the discovery of more commercially viable oil deposits.
In a separate statement, the energy ministry said on Friday that the country had some 500 billion cubic feet of natural gas.
Ugandan oil officials have long suspected the presence of gas traces, but on Friday they confirmed publicly for the first time the existence of commercial natural gas deposits.
East Africa has been a focus of hydrocarbon exploration after substantial crude oil deposits were found in Kenya, although commercial viability has yet to be established. Major gas reserves have been discovered in Tanzania and Mozambique.

London-listed Tullow Oil, France's Total SA and CNOOC of China, are exploring for oil in Uganda. Tullow has estimated Uganda could earn up to $50 billion from its oil reserves. 

Wednesday, 30 July 2014

America's scramble for Africa

"Engaging with Africa not as a choice, but as a necessity,"
 The Obama administration on Tuesday pushed for Congress to renew a 14-year-old trade program giving African countries duty-free access to U.S. markets, warning that allowing the program to expire would disrupt trade flows between the two regions.
U.S. Trade Representative Michael Froman said the African Growth Opportunity Act, or AGOA, which expires on Sept. 30 next year had both benefited African countries and supported 120,000 U.S. jobs.
Froman's remarks came just days before the White House is set to host 50 African leaders at a three-day U.S.-Africa summit aimed at strengthening relations. AGOA, which is at the heart of U.S.-Africa trade ties, will be a key issue.
Enacted in 2000, AGOA gives about 7,000 products from sub-Saharan African countries access to U.S. markets free of import duty. Nearly 40 African countries are eligible to take part.
"Given that Africa is home to the world's fastest growing middle class and six out of 10 of the fastest growing economies in 2014, it's easy to see why companies like General Electric Co, Caterpillar Inc and Procter & Gamble Co increasingly view engaging with Africa not as a choice, but as a necessity," Froman said.
The head of the House Ways and Means trade subcommittee, Devin Nunes, told reporters Congress could package AGOA renewal together with fast-track power for trade negotiations, or trade promotion authority (TPA), and other outstanding trade issues.
"We have so many of these trade issues that are basically standing behind TPA, we have got to get TPA first," he said.
Exports from sub-Saharan Africa to the United States under AGOA and other trade preferences totaled $26.8 billion in 2013, according to USTR data. Most of those exports were petroleum products; non-oil goods accounted for just $4.9 billion.
"That is still relatively modest and we want to see that grow," Froman said at an event sponsored by the Brookings Institution.
The trade program has been criticized for disproportionately benefiting certain industries and a handful of countries, including Nigeria, South Africa and Angola.
Some African leaders have also said their countries lack the skilled labor and infrastructure to take advantage of it. Several African countries, for instance, are plagued with poor roads and shortages of electricity, which leads to power rationing that interrupts manufacturing.
Froman said the Obama administration plans to address AGOA's shortcomings and expand access to the program while also holding eligible countries more accountable. His office wants Congress to renew the program in advance.
Lawmakers will likely demand overhauls to the program, including making it more 
reciprocal so the United States can enjoy open access to African markets.

"The specific parameters of AGOA, of course, are ultimately a prerogative of Congress, and we look forward to working with them to put in place a program that reflects the reality of Africa's rise," Froman said.

Wednesday, 30 April 2014

Tullow to Conduct Extensive Appraisal Drilling and Testing for Oil Production in Kenya

British firm, Tullow Oil Plc, says it will conduct extensive appraisal drilling and testing throughout year 2014 and 2015.

The objective of the extensive appraisal drilling and testing is to finalize a commercial production development report.

This report is what the government of Kenya wants. Nairobi wants to start selling oil as early as 2016 or 2017 and Tullow Plc must provide a comprehensive development report.

Speaking in Nairobi, Robin Sutherland, Tullow Oil Plc exploration manager for Sub Saharan Africa said the company is expected to submit a field development plan to the government of Kenya in the fourth quarter of 2015.

“We are expecting to submit our field development plans to the government in the fourth quarter of 2015,” Robin Sutherland told an oil and gas conference in Nairobi.

The appraisal drilling and testing will quantify the commercial viability thresholds; enable both the government and the investors to make projections.

Monday, 31 March 2014

Kenya's Airport financiers named

The prototype of the new terminal
Kenya’s government is in talks with four companies, including Standard Bank Group Ltd. (SBK), Africa’s biggest lender, about funding the construction of a $653 million Green field airport terminal, the Kenya Airports Authority said.
The state is in discussions with the African Development Bank, China Development Bank Corp. and Sunnyvale, California-based AAE Systems Inc. about funding 85 percent of the project cost, Managing Director Lucy Mbugua told reporters today in the capital, Nairobi. The first phase of construction of the new terminal in Nairobi will begin in July and is expected to end in 2017, she said.
“They have already given us their terms and we are in discussion,” Mbugua said.
Kenya is expanding its Jomo Kenyatta International Airport as it seeks to boost arrivals of tourists who are the second-biggest source of foreign-currency earnings in East Africa’s largest economy. The new terminal will have the capacity to handle 20 million passengers a year, compared with the 7 million that the existing terminal, built in 1978, can process.
From Bloomberg

Tuesday, 25 March 2014

Six DreamLiners for Kenya Airways this year

The Pride of Africa
Kenya Airways will take delivery of its first Boeing 787 on April 4, marking the first of six of the type to join its fleet in 2014.

Nairobi-based Kenya Airways said the new additions, which also include a 777-300ER slated for delivery in May, form a key part of its Project Mawingu 10-year growth strategy.

The aircraft will be used as part of a “deliberate effort” to step up Kenya Airways’ long-haul capacity, allowing the carrier to increase its number of direct flights, and add new destinations and frequencies.

“Routes to Paris, Amsterdam and Beijing are among the destinations earmarked for direct flights, as we continue exploring new markets that will be instrumental in helping us achieve our objective, to contribute toward the sustainable development of Africa,” Kenya Airways CEO Titus Naikuni said.

Kenya Airways also recently confirmed plans to launch new budget carrier Jambo Jet on April 1.

Wednesday, 12 February 2014

Kenya to call or EOI on crude pipelin

An oil Pipeline. Pipedream turns reality?
KENYA will soon float an EOI for the design and construction of a crude oil pipeline from Turkana to the proposed Port of Lamu. Although the ownership of the project is yet to be decided, the government appears to be thinking a PPP.

Available information seems to suggest that the government could be looking at a DBFO. The cabinet Secretary in charge of Energy in Kenya has indicated that the government will expect prospective investors to submit engineering, procurement and construction (EPC) models as well as their financing arrangements.

The US$3 billion pipeline was initially conceived to transport crude oil from South Sudan to the port of Lamu. That was before Kenya discovered oil in 2013. Now that Kenya has discovered commercial quantities, she is set take the lead in the development of the pipeline. South Sudan is stumbling from one crisis to the next which could slam the breaks on the country’s development agenda. South Sudan for all intends and purpose is going to be a passenger on the project.

Toyota Tshusho, the investment arm of Japan Toyota Motor Corporation had tendered a US$3 billion bid to build the Pipeline with an option to extend it to Uganda for a total cost of $5 billion.  It is not clear what become of that unsolicited bid. However, her preliminary designs for the project, with several components in addition to the pipeline including a 120,000bpd refinery at Lamu. That could stand her a good stead in future bids.
Kenya’s oil finds have reached commercial thresholds. Consequently, it was time the country started preparing infrastructure ahead of commercial production, hopefully in three years.
So far Kenya’s oil wealth is estimated at 600 million barrels out of seven wells. Exploration is still going on and more crude is likely to be discovered.

The plans by the ministry of Energy and Petroleum got a boost after Uganda signed a memorandum of understanding with Britain’s Tullow Oil, France’s Total and China’s CNOOC last week in a significant step towards launching oil production in the country. Uganda is also looking at exporting her crude oil through the LAPSSET corridor, that is the Lamu port.

A development plan prepared by the Energy ministry shows that production is likely to begin during the 2016/7 financial year.

The pipeline is on the Lamu port, South Sudan, Ethiopia transport corridor (LAPSSET). Consequently, it is expected to be extended to South Sudan, and Ethiopia. Although it is not clear the distance of pipeline in Kenya, the initial proposal placed the distance at 2000 km from Juba to Lamu.  

Tuesday, 4 February 2014

Tanzania’s US$30bn Power gap

03 February, 2014 06:28:00

 Reports indicate that Tanzania's energy infrastructure will require a new investment of almost $3 billion annually for the period of 10 years to meet its power supply demand.
The figure was revealed during the Powering Africa Tanzania symposium, a gathering that brings together key public and private sector energy stakeholders.
The African Development Bank's Chief of Power Engineer, Dr Babu Ram, says Tanzania has a massive infrastructure gap and it’s getting worse every day.
Dr. Ram believes that spending at the increased level would absorb just over 20% of the country's GDP. On average, African countries are spending only 40% on infrastructure.