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Naivasha SEZ firms get huge power discounts : The Standard

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Geothermal Development Company steam well in Menengai. Firms at Naivasha SEZ will pay less for geothermal power. [Kipsang Joseph, Standard]

Companies that will operate at the Special Economic Zone in Naivasha will pay up to a third of what other power consumers pay for electricity.


The industries that will operate at the SEZ will pay Sh5 per unit of power they consume. This is cheaper than the Sh 15 per unit that  small and medium consumers pay. Even large commercial and industrial consumers are currently charged Sh10.10 per unit.

This basic cost of power is however subject to other costs including government levies and taxes that push up the cost of power.

At Sh5, the cost will be lower than the Sh9 per unit that the government has in the past promised, to make the country a competitive manufacturing destination.

SEE ALSO :Firms at Naivasha industrial park to get lower power tariff

The Energy and Petroleum Regulatory Authority yesterday published the new tariff for the Olkaria-Kedong SEZ, which is being put up in close proximity to the Suswa Standard Gauge Railway (SGR) terminus.

“Notice is given pursuant to… the Energy Act 2019, that EPRA has approved the applicable tariff of Sh5 per kilowatt hour (kWh) for the Olkaria-Kedong SEZ in Naivasha,” said the energy industry regulator in a gazette notice yesterday.

The SEZ is located close to the geothermal power fields and electricity transmission over short distances has played part in giving investors a cheap tariff.

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The move is in a bid to attract investors, particularly manufacturers in the country as the government eyes to increase its contribution to the economy to 15 per cent by 2022 from the current eight per cent.

Endowed with geothermal

SEE ALSO :Kisumu secures land for special economic zone

In a response to queries as what informed developing a new tariff for the SEZ, EPRA Director General Pavel Oimeke said it was “in a bid to promote the Big Four agenda as well as Naivasha, especially Olkaria region, is endowed with geothermal resources. Additionally, the government of Kenya has developed the geothermal fields”.

The government recently said it has found an anchor investor. The Industrialisation ministry in December said that Danish brewer of Turbog and Carlsberg beers plans to invest $45 million (Sh4.5 billion) in a factory in the SEZ.

The firm will produce Tuborg, Carlsberg, Holsten and Kronenbourg beers, as well as Somersby Cider at the factory.

EPRA has also developed an additional tariff for commercial and industrial consumers connecting at 220 kilovolts (KV), who are essentially large manufacturers.

The consumers, who will be categorised as CI6 (commercial and industrial – category 6), will pay Sh7.99 per unit of power they consume while this will go down to Sh3.995 per unit during off peak hours. This is in comparison to CI5, who are currently the largest power consumers connected at 132KV, who pay Sh10.10 and Sh5.5 in the off peak periods.

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The charges per unit for commercial and industrial tend to go lower depending on the size of the consumer with CI5 paying the least, but also account for the largest share of revenues to Kenya Power owing to the high consumption of electricity despite being few in terms of numbers.

Street Lighting category – costs mostly borne by counties – however pays a lower charge of Sh7.5 per unit but on account of being highly discounted.



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Special Economic ZoneNaivashaSEZSGR

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KQ counts $8m in lost revenue after flying out of China route

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JAMES ANYANZWA

By JAMES ANYANZWA
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Kenya Airways (KQ) has lost $8 million in revenue in about one month since it suspended flights to China as a precaution against the deadly coronavirus outbreak.

The losses on the Nairobi-Guangzhou route include foregone passenger and cargo revenue.

Acting chief executive Allan Kilavuka told The EastAfrican that China is a key cargo origin as well as a main feeder to the regional freighters, and the suspension of flights since the end of January has dealt a big blow to the airline’s revenues.

“We are looking at lost revenue of about $8 million, both passenger and cargo. However, various initiatives are in place to increase passenger and cargo revenues on other routes to minimise this impact,” said Mr Kilavuka.

The coronavirus has so far infected more than 75,000 people globally and killed over 2,200.

“I am optimistic that the situation in China will be under control soon and we will resume our service that continues to create convenience and a good flying experience for all our guests,” he added.

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He said that KQ switched the aircraft that operated the route to China, to Dubai, from February 11, and changed the timing of the Bangkok flight from a midnight departure to early morning as a way of maintaining operational efficiency and minimising disruption to passengers.

“Due to our additional precautionary measures we have faced some delays in operations. We are working closely with the port health teams from the Ministry of Health as guided by the World Health Organisation who continue to monitor and advice on the next steps to take with regards to the coronavirus,” he said.

KQ’s stock on the NSE has fallen by 1.29 per cent over the past month to trade as low as Ksh2.29 ($0.022) per share on Thursday last week.

In the past seven years, the share price has dropped by over 75 per cent from a high of Ksh9.40 ($0.094) in 2013.

KQ, which is set to be delisted from the Nairobi Securities Exchange after parliament approved its takeover by the State, widened its losses for the year 2018 to Ksh7.5 billion ($75 million) from Ksh6.4 billion ($64 million) in 2017.

Its net loss for the six months’ period to June 30, 2019 more than doubled to Ksh8.5 billion ($85 million) from Ksh4 billion ($40 million) in the same period the previous year (2018).

Globally, the International Air Transport Association (IATA) forecast the aviation industry will lose $29 billion worth of passenger revenues this year, of which $40 million will be from African airlines.

According to IATA, carriers outside the Asia-Pacific are forecast to lose $1.5 billion, assuming the loss of demand is limited to markets linked to China.

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Global traffic is forecast to drop, causing the first overall decline in demand since the Global Financial crisis of 2008-2009.

“This will be a very tough year for airlines,” said Alexandre de Juniac, IATA’s director general and chief executive.

“It is clear the airlines are struggling. Our initial analysis suggests that we are facing a 4.7 per cent hit on global demand. That could more than eliminate the 4.1 per cent growth we forecast for 2020 in December.”

Kenya Airways flies to Guangzhou, China’s third-largest city, three times a week.

Before the suspension of the flights, a passenger from China was quarantined after being suspected to have contracted the deadly flu-causing virus.

Regional airlines such as RwandAir and Air Tanzania have also suspended flights to China over the viral outbreak.

Globally, Virgin Atlantic, Germany’s Lufthansa, Air France and KLM SA have also stopped flying to China.

Kenya’s lawmakers have approved the nationalisation of KQ to save the airline that has been run down by mismanagement and mounting debts.

The government has adopted a plan to buy out KQ’s minority shareholders and convert shares held by commercial banks into debt.

Under the plan, the government will also create a special purpose vehicle — Aviation Holding Company (AHC) — to manage Kenya’s aviation sector.

The AHC will have four subsidiaries — Kenya Airways, Kenya Airports Authority, Jomo Kenyatta International Airport and a centralised Aviation Services College, which will be run independently.

KQ is 48.9 per cent owned by the government, and a group of 11 local banks which own 38.1 per cent of the shares.

Other shareholders include KLM Royal Dutch Airline (7.8 per cent), employees (2.4 per cent) and other shareholders at 2.8 per cent.

However, the airline is facing difficulties keeping up with its competitors such as Ethiopian Airlines, Rwandair, Emirates, Qatar and Etihad, which are all fully state-owned and subsidised, and have engaged in aggressive growth strategies focused on volume and market share.

KQ’s former chief executive Sebastian Mikosz quit in mid-December after he declined to extend his three-year contract, which expired on December 31, citing personal reasons.

In July last year, chief operating officer Jan De Vegt resigned after serving for three years, and chief financial officer Hellen Mathuka was suspended in September.

KQ was listed on the NSE in 1996 after the government offered a 51 per cent stake to the public at an offer price of Ksh11.25 ($0.11) per share.

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Uhuru should woo the diaspora to fund development projects : The Standard

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Kenya has a largely untapped resource that until now has remained mostly off the radar: the diaspora.
This community regularly sends money to family members at home to pay for food, education, necessary medical services and other day-to-day expenditures.
However, these remittances are rarely invested into our economy in a more than superficial way. This is partly due to lack of awareness by Kenyans in the diaspora about how investing in Kenya can yield high and secure returns. Another reason is that the government has not had strong enough “pro-diaspora policies” to attract their assets,” according to Shem Ochuodho of the Kenya Diaspora Alliance.

SEE ALSO :After Uhuru decision on housing, state must listen to people more

This is gradually changing, however. There now seems to be an effort by the country’s leadership to reach out to Kenyans abroad. The Building Bridges Initiative, for instance, engages with them by calling for more inclusivity of Kenyan citizens, no matter where they reside. It is surprising that it took this long for this recognition to be publicly made by the government, but better late than never. It is yet another testament to the kind of forward-thinking that we have seen in the BBI taskforce findings.
Kenyans in the diaspora have increasingly expressed their interest in getting more involved in local issues, whether that be through politics or the economy. Partnering with them to finance Big Four development projects is a great way to begin.
One idea that is already in motion is a green bond, which will allow Kenyans living abroad to directly invest in affordable housing, food security, local manufacturing and affordable healthcare programmes. The money could also be used to invest in agribusiness ventures and new healthcare facilities – such as cancer research and treatment centres.

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The current account deficit in Kenya was reduced from five per cent of gross domestic product in 2018 to 4.6 per cent in 2019. According to Central Bank of Kenya (CBK) Governor Patrick Njoroge, this was partly due to diaspora remittances. If Kenyans are working hard to send money home, why not help them grow their money while at the same time contributing to the prosperity of the country?
Structured strategy

SEE ALSO :The wars in Uhuru and Raila political parties

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Using this logic, the CBK is working to lengthen the maturity period of Treasury bonds. The bonds are a safe and reliable source of income from interest payments every six months.
According to the Kenya Diaspora Alliance, around 75 per cent of remittances are spent on daily family consumption, while only 25 per cent is invested. Typical investments include real estate, land and savings. The government is only now beginning to develop a structured strategy to reach out to the diaspora and inform them of good ways to invest their money in public projects. While real estate is widely seen as a relatively safe investment all over the world, not a lot of information has encouraged people to invest in growth at the micro level. For example, President Uhuru can mobilise the diaspora community to finance part of the SGR from Suswa to Kisumu.
The original plan was to draw the funds from China, but this offers us a great opportunity to be more self-reliant.This is precisely the kind of unity that Uhuru and Raila Odinga sought when they shook hands in March 2018. It was something more transcendental. It was building a sense of community for people who have felt inadequately represented and and wondered about their role in the larger framework.
– The writer is an architect and comments on topical issues.


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‘Introduce Alcoblow to gauge sobriety of MCAs’

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GEORGE MUNENE

By GEORGE MUNENE
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There was an uproar in Embu County Assembly when one of the members suggested that Alcoblow be introduced to gauge the sobriety of her colleagues before any sitting.

Nominated ward rep Margaret Lorna Kariuki found herself in trouble when she insisted that the gadgets are important as they would ensure discipline in the House.

Temporary Speaker Phillip Nzangi said the drunkenness claims were serious.

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Evurore MCA Duncan Mbui demanded that Ms Kariuki be ruled out of order and forced to apologise to her colleagues for painting them in bad light.

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