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How Kenyans may have lost Sh29b in SGR tender : The Standard

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President Uhuru Kenyatta flags-off the first freight train connecting Nairobi to Naivasha’s Inland Container Depot at the SGR Nairobi Terminus. [PSCU]

Pricing of the Standard Gauge Railway project may have been inflated by nearly Sh29 billion, fresh details from analysis of the tender documents show.

Kenya Railways Corporation allowed the contractor to adjust costs of the civil works by Sh11 billion (a 3.5 per cent increase) and Sh2.7 billion (2.5 per cent) for the accompanying facilities.
That is only part of a long list of price adjustments even before the construction of the Sh372 billion project started.
It has also emerged that separate tenders were awarded for the project, and not one as it has been believed all along.

SEE ALSO :Truth behind State’s bid to run truckers off Mombasa Road

One was entered into on July 10, 2012 for the civil works on the railway line while the other for supply and installation of facilities, locomotives and rolling stock on October 3, 2012.
Among the suspected items that were double procured, according to documents filed in court, is the design of the various aspects such as signaling while they were never custom-made for Kenya Railways.  
Locomotives and rolling stock were to be made to meet the Chinese standards as agreed in the contract, meaning there would be no need of executing fresh design works.

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Documents filed in court as annexures to a petition challenging the award lay bare details of the country’s most controversial project yet.
Huge pricing variations were allowed to the selected contractor which led to major losses to the taxpayer, according to the petition filed by activist Okiya Omtatah.

SEE ALSO :An economic miracle needed to save new railway

A consortium of three firms, TSDI-APEC-EDON, was in May 2014 contracted to provide the design and construction supervision at Sh4.2 billion, yet the same works had been factored into the main tender won by the Chinese contractor.
China Road and Bridge Corporation, the contractor, had included the supervision works in its tender pricing it at Sh7 billion ($84.9 million) at the prevailing exchange rates.
Secret tender documents
These are among the new details of the top secret tender documents, which government officials have done everything to hide from the public.
President Uhuru Kenyatta publicly committed to share a copy with a reporter more than a year ago but the promise has never come to pass.

SEE ALSO :Uhuru to open Naivasha SGR station

It all started in early 2010 when the idea of constructing a modern railway was mooted by the Mwai Kibaki administration. A double track for the entire length to Kisumu or Malaba, and an electricity-powered train service was desired. Passenger trains required in the invitation to tender were required to have a top speed of 220 kilometres per hour while freight trains would do 120 kilometres per hour.
It is unclear what became of the specific tendering process after then, until two years later when CRBC appeared after a supposed government-to-government negotiation.
CRBC presented its feasibility study to the Kenya Railways on June 26, 2012, to set off a chain of events that culminated in the award of the tender just two weeks later.
Within the two weeks, a negotiating team was formed, discussions of the proposals were done, and approvals from the relevant ministries and the Attorney General were sought.
Further, the Kenya Railways board of directors sat and approved the project, before the commercial agreements were negotiated and the contractor notified of the award and the contract signed.

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SEE ALSO :President Uhuru launches Nairobi-Suswa SGR

In the negotiations, the contractor was found to have inflated the pricing of specific items on the bill of quantities by Sh2.6 billion, which was agreed to be knocked off to keep the price for civil works at Sh220.9 billion.
Accepted offer
On July 11, 2012, Kenya Railways wrote to CRBC informing it of the award before the contractor accepted the offer and responded the same day.
“We take this opportunity to convey our appreciation for the award of the contract, and look forward to signing the commercial contract with you at the earliest time,” Li Qiang wrote on behalf of CRBC.
The following day, then Kenya Railways Managing Director Nduva Muli, signed the commercial contract for the civil works.
Another contract was signed with the same firm on October 4, 2012 for the supply and installation of facilities, including the stations, locomotives and rolling stock for Sh96 billion.
In the negotiation for either contracts, CRBC was allowed variation in pricing of up to five per cent, which is also part of the subject of the petition.
Philip Mainga, the acting managing director of Kenya Railways, said yesterday he could not comment on the matter.


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Started with free gigs – Now I choose my clients : The Standard

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Photographer Emmanuel Jambo.

Back when Emmanuel Jambo was young and watching his elder sister do photography, it wasn’t the camera itself that fascinated him.

“It was the dark room, the transformation of having photos appear on paper and the black and white print,” he says. He later quit a well-paying job in the United States about 12 years ago to pursue his photography passion full-time.
He has come a long way since then: from dealing with payment delays, non-paying clients, visiting his sister here in Kenya and deciding to stay, getting gigs from local magazines to taking President Uhuru Kenyatta’s official portrait and pictures of other and heads of state.
He shares how he managed to turn his passion into a business.
You quit a well-paying job to pursue your passion. At what point did you become confident enough to quit?
Everything in life is a risk. I had to take the risk to do something I loved. Granted, it was a well-paying job –  12 years ago I was making an equivalent of Sh300,000 monthly. It was a lot back then. But I started getting photography jobs here and there. Photography was what I did for fun.
One day I had a photo session with a co-worker and framed the picture for her. When my then manager saw the picture, he said, “I don’t think you’re going to be here with us anymore. We’re going to lose you.”

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.  

He was an older guy, and I figured he knew things and so it felt like I was doing the right thing. At the time, I also had an older mentor, an African-American man who has been doing photography for 30 plus years and had worked with the likes of Martin Luther King Jr.
He saluted me on one of my photos. That was affirming. All that gave me confidence.
What financial preparations did you make before quitting?
I started by setting up a studio in my apartment, but I didn’t prepare in terms of setting aside some money to tide me over.
When you’re young you don’t worry about finances a lot, or look that far ahead. I was just taking a risk. From the few jobs I was getting, I just believed I was going to be all right.
How did you know how to charge for your work?
You read about it, and you ask around. I asked my mentors and people who came before me, people who were in the game. I am thankful we had internet and you could research.
I don’t know how people did it before that. With time you keep on adding to it, as you start knowing your value. 
What mistakes did you make when starting out?
Not invoicing on time. It is important to do it early because the business might shut down, or they might move – anything can happen.
They say one should do something they’re passionate about because it’s the passion that will help carry you through during the hard times. What were those times like for you?
Jobs not coming through and barely making ends meet. But I didn’t care much. People have different personalities and different lifestyles. I am a free-spirited person.
A lot of my friends make fun of me and say I am a hippie. I didn’t care that I slept on my sister’s couch – I was happy. I was comfortable to just keep going. I wanted to put out good images, express myself, make people smile – that’s what kept me going.
One challenge most creatives face is when clients want them to do things for free and get exposure in return. Did you face this?
I think everyone does. Once I decided to do photography, I read a lot on it and basically the general advice was at first you’ll have to do things for free, but within your limits.
It’s a good way of creating a portfolio because people will want to see what you’ve done before they hire you. The first wedding I did was for free. The guy was so happy with what I’d done he paid me US$ 800 (Sh80,000).
That was a lot of money 12 years ago. But then you reach a point when you follow your guts in knowing if you’re being exploited. That’s part of knowing your value too. Even if you’re doing it for free, who are you doing it for and is it real exposure?
Would you do work for ‘exposure’ now?
I don’t need exposure now. I do collaborations that I know will benefit me. The photography I do for free is for charity. It is my part of giving back. When you earn something, you feel blessed and give back, just like I do mentorship and workshops for free.  
What do you know now that you wish you knew when you first started?
You need to be firm. I’m a very laid back person. I joke a lot and sometimes people take you for granted. I wouldn’t change it for the world because that is who I am, but you need to be firm and hands-on when running a business, and remember that not everyone coming through the door is a good person.
Take time to understand the people that work for you and try to find out the bad apple from the good apple way before. I would also not burn myself doing too much work. I used to do three shoots a day. Rest is very important.
But then when you’re first starting out, you say yes to every assignment because you want to put your name out there and you want to put food on the table. It took me seven years to start choosing who I wanted to work with. It took me that long to believe in energy and chemistry.
For instance, before I say yes to wedding assignments, I interview the couple. I want to see if theirs is energy I want to be around the whole day and for the next four days when I’m editing the images.
If I feel funny being around a couple, I don’t do it, even if the money is good. But you can’t be picky when you’re new in the game.
What advice would you give people who want to turn their passion into a business?
It is not easy, but go for it. You don’t want to look back and regret not trying.
[email protected]   

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Kenya Power Net Earnings drop 92% to KSh 262 Million

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Although Kenya Power and Lighting Company (KPLC) plc earned
more revenue from an increase in the customer base, higher costs of financing
the business and purchase of more power for the grid, dampened its financial
performance last year.

Net earnings of state utility firm dropped by a significant 92
per cent from KSh 3.27 billion in June 2018 to KSh 262 million last year.

This is according to its financial results for the year ended 30th June, 2019.

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KPLC attributes the decline in its earnings to increase power purchase costs, which rose by KSh 18.1 billion from KSh 52.8 billion to KSh 70.9 billion. Two power plants with a combined generation capacity of 360 MW were commissioned during the period.

Finance costs surged a whopping 47 per cent to Sh10.3 billion from Sh7 billion. The firm states that this was due to the increased usage of short-term borrowings to cover cash flow shortfalls and unrealized foreign exchange loss.

The firm’s gross profit fell to KSh 42.9 billion from KSh 47.3 billion while the size of its balance sheet shrunk from KSh 332 billion to KSh 328 billion during the period under consideration.

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Cash generated from operating activities declined to KSh 28.3 billion to KSh 26.6 billion. Revenue from electricity sales grew by KSh 16.9 billion from KSh 95.4 billion in 2018 to KSh 112.4 million at the end of the 2019 financial year.

KPLC attributes this rise in revenue to a tariff review at
the beginning of the year. It was after this review that the firm further
lowered rates for small businesses and broadened those for domestic customers.

The firm recorded growth in electricity sales from 7,905 GWh to 8,174 GWh. Transmission and distribution costs declined from KSh 44.5 billion to KSh 41 billion.

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Kenya Power Seeks to Hike Electricity Costs

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Managing a cash flow crisis in your start-up : The Standard

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Cash flow- the one item at the center of every business is also the key impediment to the growth of many businesses.

In Kenya, well-thought out business plans hardly survive five years.
This is often due to improper budgeting, failing to meet short term needs such as paying employees and suppliers on time. Here are some tips to unblock the cash taps.
Know telltale signs of declining cash flow
If you are faltering when it comes to meeting your monthly obligations, it is time to take a serious look into the business model. Among them could be failure to pay workers on time or going for several months on end without paying suppliers. Brian Gachari, a real estate developer says a drop in sales is the clearest sign that the business is swimming in rough waters.
“Sometimes it may not be your own making. Customers may really like your product but lack access to credit. Either way, it results in poor sales,” he says. Ignoring such early symptoms in cash flow will lead to a permanent death of the once-promising business.
Be realistic with forecasts predicting good cash flows

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.  

If the business has been going through a rough patch, it helps to readjust your sales projections and quickly find other creative ways that will ensure constant cash flows. Also, do keep in mind that projections are just that – projections.
They may or may not materialise. Daisy Rabar, a Nairobi-based event organiser says that such projections must be weighed carefully especially in a seasonal business.
“The event industry is a seasonal one. One day you predict 70 per cent profits and you end up getting nothing. Sometimes sales forecasts may depend on social media reactions on past events. Be careful before committing serious cash based on the hype,” she advices.
Keep running costs to a minimum
Every businessperson knows that keeping costs low is good for the business.  Why then do businesses sink by spending more on running or production costs than they can bring in? Experts advise that a good business learns how to trim the extra fat that makes a venture bulky. 
For example, could you cut off the middle men and procure directly from the source? What about getting people to work part time, rather than hiring permanent employees?  
“In my business, human resource and IT teams are not permanent. We have also learnt to reduce non-essential items and activities not directly related to sales and collections.” Gachari says.
Keep unplanned costs or payments to a minimum
You may plan to stay within budget and encourage your team to find ways of reducing costs. And that’s great. However, some hidden costs might be your undoing.
Count every penny needed to sell or produce a product. For example, some deliveries may require that you include insurance costs. Forget these and you poke holes in your cash flow pipes.
Grow revenues without corresponding costs
Can you look for affordable methods of generating business leads and enquiries like developing your social media front?
This is cheaper than spending cash all over town looking for a marketing deal to promote your products. In addition, develop products or services that meet the clients’ current needs as these will require less marketing legwork.
Offer favourable terms to clients
The customer is always king, so the adage goes. Your customers are the reason you set up the business in the first place and can make or break your business.
Treat them with kid gloves if only to extract that extra shilling from their pockets. With the difficult real estate business environment in Kenya, Gachari learnt this truth early on. 
“We now have to be flexible in client payments. Whereas we could ask clients to pay their dues in three months, now we are open to them paying up in one year or longer,” he says. Just ensure you have a fallback plan if you choose to extend payment terms.
Decide whether you can handle extra business proposition
Some might fear taking on extra business proposals for fear of depleting or diverting their cash flows. Others will jump into the new opportunities with the aim of “diversifying their business offering.” Where is the balance? It depends on the level of involvement and expected returns.
Rabar will not let a new business opportunity go to waste. In the past, she has burnt her fingers experimenting on several business leads but believes she leaned her lessons.
“I would not decline any new business proposal but look at ways of accommodating any new business. Just make sure you can meet your customers’ needs at a cheaper cost without compromising delivery. Such opportunities may not knock twice,” she says.  
[email protected]  

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