Ground breaking for Mombasa port this week.

The Ground Breaking ceremony for the expansion of Mombasa  Port on Thursday November 22nd 2012, we can report.

The ceremony to be officiated 2012,by President Mwai Kibaki  will launch the second of the Port’s two-phase  upgrading project that began last year. The US$ 320 million  project will turn the Mombasa port into a Mega port.

The first phase of the development project included the dredging of the port to a depth of 15 Metres. It also widened the Likoni Channel from 250 Meters to more than 300 meters, while the turning basin was widened to 600 meters. It cost a US$62 million.

The second phase  involves construction of three berths with a straight-line quay of 900 meters, reclamation of 100 hectares of land, second container terminal with a capacity of one million TEUs, construction of a 5KM link road to Mombasa southern by-pass and a Railway line.  At the end of the two-year- US$200 million project, the Mombasa Port will have a capacity of 1.25 Million TEUs. 

The Mombasa port, which is the hub of shipping business in east and central Africa, has come under intense pressure to expand in the recent past due to robust economic growth in the region and also changes in vessel sizes. 

Robust economic growth both in Kenya and among her landlocked neighbours such as Uganda, Rwanda, Burundi and South Sudan generated increased demand for imports and exports through the port.
This growth in large vessels put pressure on major ports in Africa to invest in capacity expansion. The Mombasa Port was no exception. The expansion project that will be completed by the end of 2014 will ensure that Mombasa retains its positions as a major port in Africa. 
For detail please go to http://eaers.blogspot.com/2012/11/expansion-of-Mombasa-port-begins-in.html

Konza City's ground breaking this month

The ground breaking ceremony for KonzaTecho city will take place before the end of this month, we can report.
We have reliably learnt that the ceremony, which was slated for last Month was post phoned due to security Concerns and the President's busy Diary.
"The President is keen on the project," said the source. The line Ministry, the Ministry of information is ready for the ceremony and is only waiting for signal from the president's Office.The President was due to lead the ground breaking ceremony.
 Top Ministry of information officials met earlier this week to review its preparedness and all is set, said the source. They are now awaiting the date from OP to roll out. The US$7 billion Techno city is billed the silicon Savannah. Some investors are already rearing to go and were beginning to worry about the delay.
For more details on the story Go to http://eaers.blogspot.com/2012/09/konza-techno-city-begins-in-october.html

Oh no! Not the World Bank again!

A windfarm: LWTP proposes to build a similar project

The World Bank has pulled out of Africa's largest wind power project, we have reliably learned. The bank, according to reliable sources, says the project is not viable and has therefore refused to offer guarantees sought by financiers.

This is the third project in Kenya the World Bank has sabotaged in the last six years citing feeble excuses. In 2010 its private sector lending arm- IFC pulled of Southern by pass in Nairobi at the last minute citing the "credibility of some of the contractors."  In 2006 IFC also pulled out of the concessioning of Kenya and Uganda Railways at the last-minute, also citing "unfulfilled conditions" by Sheltham Railways. The concession is still fighting for its life, six years on.

The World Bank is also said to be raising  irrelevant issues on the Kenya- Ethiopia Power connection deal-that could derail it.

 In the case of Lake Turkana wind power project, The World Bank is says that the wind farm is too big for the national power grid and huge amounts of electricity could go to waste. This, argue the mandarins at the Bank, would deny LTWP revenues and hurting its ability to repay the loans. 

Bujagali Hydropower: Was a victim of World Bank's
feeble Analysis

This is an argument that analysts find baffling. If the problem is the capacity of the national grid to distribute all the power produced in the country, the solution is to upgrade it not to try to kill a project, analysts argue. 

It is noteworthy that the bank was using the similar arguments against Bujagali Hydro power in Uganda, and is using similar arguments to stall Karuma power plant, also in Uganda. In the case of Bujagali, the the bank and its cohorts were proved wrong. The plant produces 250MW which has doubled electricity supply in Uganda, but sources indicate demand will exceed supply in the next two years.

The Bank wants to the capacity of Karuma dam reduced from 600-750MW to 400 -450 MW arguing that 700MW is excess capacity that cannot be sustained. Sound familiar?

In both cases, Uganda has demonstrated boldness and leadership  in pursuing projects that are critical to national well being. Bujagali was built despite objections. Karuma dam also appears headed in the same direction.

 In Kenya, the southern by-pass in Nairobi, which was meant to be toll-road when IFC pulled out, has now been funded by China and construction is on-going. It is a public road but going by Kenya's paradigm shift, we shall not be surprised if it becomes a toll-road on completion.

In the case of LWTP, the government  turned to the World Bank to offer sovereign guarantees after the financiers ' reluctance to fund the project on the strength of its PPA with Kenya Power and Lighting company, the power distributor in Kenya.  The Kenya government was reluctant to offer the sovereign guarantee  for a private sector funded project. 

However, it seems, it will have to offer such guarantee.  It has already been endorsed ans a flagship project by the   Vision 2030 delivery secretariat. Vision 2030 is the long term  development blue print for Kenya.

 All is not lost however for the lead financial arranger; AfDB has re-affirmed its commitment to finance the project. "The African Bank is now looking at ways of getting other guarantors to ensure the project does not delay further," local media reported.

The €582 million Lake Turkana wind project in Northern Kenya will produce some 300MW of wind generated electricity, also another first in Africa. That will be close to 40 per cent of the electricity currently generated in Kenya. LWTP has a 21 year PPA with KPLC to sale electricity to it at less than 10 US cents per unit, the cheapest in the country.

Lake Turkana wind farm will be located on a 40,000-acre farm in Loyangalani in Marsabit County. It will comprise of 365 turbines each with a capacity of - 850Kwh; the associated overhead electric grid collection system and a high voltage substation.

Already a contract for the construction of 300KM of road in the project area has been awarded.

Kenya Railways seeks investors for mini-cities project

An artists impression of Mombasa City

Kenya Railways Corporation is shopping  for investors to develop mini-cities on its idle land.The project to be build on 320 acres of land spread across threein the country will cost US$$3.0 billion, 

The mini cities will change the skyline is some of te cities, increase business activity, including tourism and light manufacturing in additon to turning the host cities into transport hubs. The corporation isthius targetting the kind of developers that are bidding for leases in Konza City.

To be developed jointly with investors on a long-term lease, the projects will be developed in Mombasa, Nairobi and Kisumu. The developments will  include; ultra- modern Railways stations, direct rail links with the international airport in the host city, commercial buildings, an industrial park, shopping arcades and resorts, malls and restaurants among other facilities. 

The project is designed to complement the facilities in the cities. In Nairobi, the corporation hopes to put up a US$1.4 billion mini-city on 200 acres of land on which it will build ultra- modern Railway station, direct rail links with the JKIA, two five-star hotels with a capacity of  accommodating 1,500 persons each, commercial buildings, an industrial park, shopping arcades, resorts, malls and restaurants among other facilities. Nairobi is expected to grow into a transport hub in the region.

The development in Mombasa will cost US$0.95 billion and will comprise of a variety of Commercial buildings; an international exhibition Centre, business park for light manufacturing; three Hotels with conference facilities for 1000 people a piece; a  Shopping arcade, malls and restaurants and an entertainment park; 

 In Kisumu, the project will cost US$806 million and will open up Kisumu city to the world. Apart from the usual railway services, the city will enhance Kisumu’s status as the transport and commercial hub of the great lakes region. 

 The development will include a variety of commercial buildings; Business park for Light manufacturing/assembly; two Hotels with conference facilities for 1000 people each, a shopping arcade, malls and restaurants; a BPO park; an  entertainment park; ultra-Modern railway station


For more details visit :http://eaers.blogspot.com/2012/03/coming-soon-railway-cities-in-kenya.html

Kenya to Silence $60m worth of Fake Mobile Phones

KENYA WILL, for three days effective this Sunday, disable an estimated 2.5 million fake cellular phones. The exercise will cost phone owners at the minimum, US$60m. Phone operators on the other hand will lose an estimated US$118,000 a month in lost revenue or US$ 1.4 million a year. Commonly known as Mark Juma Mtambo, fake handsets comprise 8.5 percent of the total number of handsets in the country at the end of June 2012. This will reduce Kenya’s cellular tele density 67 per cent from 74 per cent at the end of June 2012.

There are 29.2 million telephone handsets in Kenya, four million more than the adult population of 25 million. Silencing of Mark Juma Mtambo will reduce the number to 26.8 million handsets, still more than the adult population anyway.

It is not clear how big a chunk of the market each provider will lose.  Our Calculations show that if each provider was to lose 8.5 per cent of its subscriber base, all will lose more subscribers than they signed up between March and June 2012.

Safaricom, the largest provider with a massive 19 million subscribers could lose as much 1.6 million subscribers- which almost five times more than the new subscribers signed up between March and June 2012. The second Largest provider, Airtel, would lose 383,000 subscribers, way higher than the new subscribers signed up between March and June. Yu and Orange will lose 221,000 and 263,500 subscribers respectively.

The problem could be compounded by disabling of all unregistered Simcards.  It is not clear what is the size of unregistered Sim cards. However this can be mitigated by the subscribers simply registering their SIM cards. However, the counterfeit phones cannot be mitigated.

What are counterfeit phones? Counterfeits of phones or other products are products that sale in the name of other brands. They are what is called intellectual property thefts where, manufacturers fake the brand name of an established brand and passes his products as that brand. Counterfeits, euphemistically called replicas, are products of questionable origin, quality and safety.

And they are a threat to economies, manufacturers and the innocent consumer. Governments feel the pinch as they lose out on uncollected taxes, legitimate industry loses its rightful share of the market to pirates and consumers are exposed to substandard, falsely labeled and possibly dangerous goods. The image of the well-established brands is also destroyed.

According to CCK, as at the end June2012, the average use per handset in Kenya was 77.7 minutes per month. At the same time, reported CCK, the average tariff was Ksh 4.00 per minute. Disabling counterfeit phones alone will cost some Kshs 10million a month in lost revenue to mobile operators. According to CCK, the industry's turnover was Kshs 104,552 million (US$1.2 billion) in 2010. Therefore the financial loss to the industry will be insignificant.

However, say analysts, these figures are purely speculative. Some operators, they say, have protected themselves by selling the handsets. But the numbers indicate the kind of damage counterfeit products can inflict on consumers.

Regardless of who will be affected to what extend, the disabling of counterfeit phone handsets will cripple many businesses, particularly the vendors of such handsets who will be forced to close shop. Some, informed sources say, are already feeling the pinch as consumers are now shunning suspect handsets.

Consumers will lose for they shall be forced to fork out more money to invest in new genuine handsets in order to remain connected. Most were attracted by the price tags which are generally lower than the genuine products. The cheapest genuine handset in Kenya is about Kshs 2000 (US$22). This means that the 2.5 million subscribers will have to invest a further kshs 5 billion ($60 million) in new handsets.

While the counterfeits handsets will tossed out of the window, the genuine brand makers will be smiling all the way to the bank. Will Kenya become the darling of investors in genuine mobile handsets? Only time will tell.

Kenya –Ethiopia to trade in electricity

KENYA AND ETHIOPIA will soon launch a power trade deal that will earn the latter an estimated US$400 million a year.  Kenya for her part will not only eliminate the US$500 million in thermal power costs, she will also enjoy cheaper power tariffs. This is perhaps the first electricity trade deal in Africa.

 To enable the trade deal, a 1068KM high Voltage direct current (HVDC) electricity highway between Ethiopia and Kenya. The project to cost an estimated US$1.26 billion will commence next and will last four years, being completed in 2017.

The project is co-financed by the World Bank, The African development Bank, the French Development agency and the governments of Kenya and Ethiopia. AfDB last week approved a US$337.5 million loan for the project. The World Bank is yet to approve the lion’s share of US$ 684 million. Analysts, however expect the Bank to move soon. AFD will cough some US$118.5 million while the governments of Kenya and Ethiopia will contribute US$88.5 million and US$31.5 million respectively.

The deal will see Ethiopia supply Kenya with 2,000MW of electricity at US$0.0065 per KWh. This will earn Ethiopia some US$400 million a year from 2018 onwards.  The Ethiopian Electricity generator EEPP has signed a 25-year PPA with Kenya power and lighting.

Ethiopia has the potential to produce 45,000MW of hydro – electricity- the largest in Africa. Currently she generates only 2000MW but is already expanding capacity to generate 11,000MW by 2017. The link will make Kenya an electricity trading hub in East Africa.

 Kenya, Tanzania, Rwanda, Burundi and DRC are members of the East African Power Pool (EAPP) and this link brings the dream of a regional trade in electric power closer. This would make Kenya an electricity power trade hub in the region.

 Apart from imports from Ethiopia, Kenya is also working hard to generate some 1800Mw of electricity by 2016 from other clean sources including: geothermal power and wind energy.  Kenya, the leader in geothermal power generation in Africa boasts of an estimated 10,000MW of geothermal power and another 3000MW of wind power.

Kenya has found off-shore LNG Gas deposits

Kenya has struck its first natural gas deposits near Malindi. Tullow Oil Plc , which partners with Australian oil prospecting company Pancontinental , announced the discovery this morning.

 It said that it has discovered approximately 52 net metres (about 170 feet) net pay of natural gas pay so far at the Mbawa deep-water well.

 The Mbawa 1 exploration well was drilled to a depth of 2,553m. It plans to drill the well further to 3275 metres. It said that the commercial viability of the find will be determined once the logs and sample analyses are completed.

Officials however, say that the “gas discovery is very promising and it is the first ever substantive hydrocarbon discovery offshore Kenya.”

"With drilling continuing to a deeper exploration target, these interim results may be the first part of the story in this well, and they are certainly just the beginning of the main story of oil and gas exploration offshore Kenya,” said excited officials.

This discovery comes exactly six months after Tullow oil, discovery 100metres of net pay of crude oil in the Turkana County. The find at Ngamia-1 well has raised hopes that Kenya of an oil find in Kenya.

 The new announcement raises Kenya’s profile as a potential Oil and LNG producer and exporter. Such discoveries have made the areas previously deemed as marginal lands to high potential lands. The discoveries, just in the neighbourhood of the proposed Kenya’s second transport corridor, Lapsset,  also raise its profile to highly viable business venture.