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OLONYI: Kenya could do without coal’s poisonous legacy

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Kenya could do without coal’s poisonous legacy

At the heart of opposition to the planned 1050MW coal-fired power plant at Kwasasi, about 21km from Lamu Old Town are the environmental and health ramifications of coal power production. FILE PHOTO | NMG 

At the heart of opposition to the planned 1050MW coal-fired power plant at Kwasasi, about 21km from Lamu Old Town are the environmental and health ramifications of coal power production.

Ahmed Ali, founder of Lamu Youth Alliance, is deeply concerned. He contends that Lamu residents may soon be breathing toxic air and eating food cultivated on lands contaminated with heavy metals from acid rain.

Ahmed is worried that the controversial coal plant or the massive port under construction will not only impact the cultural heritage in Lamu but may also lead to a loss of its UNESCO world cultural heritage status.

Coal ash from the plant will be disposed of in ash, pits which will contaminate ground water, ocean waters and marine ecosystem through leaching, spills or even monitored discharges. Most residents in Lamu depend on wells and borehole water for domestic use.

Contaminated ground water is thus a real health risk. Consumption of water contaminated with heavy metals like arsenic, cadmium and others elevates the risk of cancer, damage to the neurological and gastrointestinal systems, kidneys as well as the immune system.

An analysis of 2018 data from 265 coal-fired power plants in the USA carried out by the Environmental Integrity Project and Earthjustice found that 91 per cent of those plants were contaminating groundwater with unsafe levels of coal ash pollutants.

Nitrous oxides from coal combustion cause cardiovascular and lung diseases and children are particularly susceptible to such airborne pollutants.

Particulate matter from coal combustion are associated with smog, respiratory diseases, cardiac diseases, low birth weight and premature births.

Sulphur dioxide and nitrogen oxides similarly contribute to the formation of nitrates and acid rain, which acidifies water bodies, damages vegetation and coastal ecosystems.

Nitrate pollutants cause algae blooms that kill fish and stifle marine biodiversity. Whereas the above repercussions will be felt profoundly in Lamu, neighbouring counties and the country in general, the plant’s carbon dioxide emissions will spawn global consequences.

Carbon dioxide emissions from this single plant will equal the current total emissions of Kenya’s entire energy sector, thus doubling the national carbon dioxide emissions and contributing to accelerated climate change. That will be contrary to both the National Climate Change Action Plan and the Paris Agreement where Kenya committed to reduce emissions by 30 per cent by the year 2030.

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Manda Bay area where the plant is to be situated is endowed with an extensive mangrove forest, seagrass beds and coral reefs. Dredging to operationalise the plant will result in permanent loss of those habitats.

The plant will draw large amounts of cold water from the ocean to supply the cooling system and discharge the waters back into the ocean after absorbing the heat.

Warm water discharge into the sensitive Lamu marine ecosystem will be detrimental to organisms like corals and other marine creatures but conducive for invasive species to thrive. Process wastewater from the coal plant like oil-contaminated wastewater and chemical contaminated wastewater are an additional source of pollution.

There is a global coming to terms with the toxicity of coal and its longstanding hazardous effects on human health and the environment. Coal consumption for energy production in the US energy sector has been shrinking for 12 years and is projected to decline by a further eight per cent in 2019.

Across the Atlantic, EU leaders have endorsed the objective of reducing Europe’s greenhouse gas emissions by 80-95 per cent by 2050, as compared with their 1990 levels. The German Coal Commission has recommended coal-fired power generation be completely ended by 2038.

Coal energy is promoted as being low-cost. However, when factored in, the social and environmental costs of coal-generated electricity like pollution, greenhouse gases and terminal diseases make it substantially expensive.

Justification for such a counterproductive development in Kenya is lacking bearing in mind that demand for electricity has not outstripped supply. Kenya’s peak energy demand currently stands at about 1,832MW against a total installed capacity of 2,351MW.

Plans to increase energy generation capacity in anticipation of economic growth are imperative and in order. However, such plans should focus on renewable energy.

Kenya is endowed with a mix of renewables like geothermal, hydro, wind, solar and biomass which are all begging to be harnessed.

The Constitution guarantees the right to a clean and healthy environment, including the right to have the environment protected for the benefit of present and future generations. Coal is considered the dirtiest of all fuels and is therefore at absolute odds with the right to a clean and healthy environment.

Olonyi is an environmental lawyer



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Rethink disastrous sports betting taxation policy : The Standard

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Kenya has been busy on the international trade circuit, signing deals with the UK and announcing that negotiations for a trade agreement with the US are now on. This is good news because if done correctly, opening of these vast developed markets could power Kenyan exports.
There is, however, a frequent complaint made by international investors regarding the business climate in the country: taxation.
Speaking during a breakfast meeting hosted by the American Chamber of Commerce in Kenya, Coca-Cola’s Phillipine Mtikitiki blamed high and unpredictable taxes as one of the barriers to doing business in Kenya.

SEE ALSO :Best countries to do business

For instance, it makes business planning and forecasting difficult when new and unexpected levies are introduced to businesses and have to be absorbed or passed on to consumers.
Indeed, Mark Measick the USAid mission director in East Africa noted that Kenya will not be “trade negotiation” ready until the issue of a stable and predictable tax regime is dealt with.
This is because international investment is made by private sector based on the attractiveness of the investment destination of which the prevailing tax regime is a big part.

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Which is why it bears looking at what is happening in the sports betting industry. Essentially, this is an industry that has almost been taxed out of existence in the national jurisdiction. 
Misapplication

SEE ALSO :Treasury’s growing appetite brings pain to taxpayers

Not only has there been a rush to introduce taxes to the industry, but there has also been deliberate misapplication of the taxation regime in ways that utterly make no sense. For instance, when someone places a bet of Sh100 and wins Sh50 on the outcome of a football game, the tax they should pay should be on the winnings not the original wager amount.
A quick look at how the tax regime has changed over the last seven years bears this unpredictability out. In 2013, winnings payable to bettors were subject to a withholding tax of 20 per cent. This was later reduced to 7.5 per cent in January 2016.
In September 2016, this withholding tax was suspended, instead a betting tax of 12.5 per cent on gross gaming revenues was introduced. By January 2018, this betting tax was escalated to 35 per cent before being reduced to 15 per cent in 2019.  However, withholding tax on winnings was now reintroduced at 20 per cent.
As at November last year, an excise duty of 20 per cent on the amount bet was introduced.
Further, the definition of winnings was expanded to widen the scope in 2018. Currently, Kenya Revenue Authority has chosen to interpret its mandate to extend to taxing the entire amount wagered plus winnings.

SEE ALSO :Changes that marked the decade

This makes a mockery of the whole taxation regime and calls into question whether the tax authority, an agent meant to collect taxes for the government for a commission, has overstepped its mandate in granting itself interpretive powers that it does not possess.
While KRA has powers of collection of taxes and enforcement of taxation rules, it is doubtful that its mandate extends to the independent determination of how such taxes should apply.
As Professor Migai Akech notes in his book, Administrative Law, “the taxation power needs to be exercised judiciously lest it threatens the very same individual liberties that government is established to protect.”
Therefore, he notes, taxation ought to be applied according to the principles of equity, fair treatment of taxpayers and involvement of taxpayers in public participation when making changes to the tax policy.
Arbitrary process

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SEE ALSO :Sudan passes 2020 budget with anticipated deficit of USD1.62 billion

In the introduction of multi-layered taxes on the sports betting industry, a lot of things have gone awfully wrong from the start. One of them is that the process has been arbitrary and ill-informed, resulting in chaotic implementation.
The industry was clearly not consulted and the imposition of the added taxes in retrospect was motivated more by a need to plug gaping holes in a budget whose figures are now known to have been cooked to hide certain public debts.
Rather than result in the expected windfall for the tax authorities, the amount of taxes collected from the sports betting industry has actually shrunk as betting companies fold up operations and send workers home.
In 2018 for instance, when the excise duty on betting winnings was 15 per cent, the government was able to raise more than Sh12 billion which was meant to go into a Sports Fund to develop sporting activities.
This money was later diverted to the universal health coverage fund to the detriment of sports, and the all too familiar tales of Kenyan sports teams stranded in foreign capitals for lack of funds have become the norm.
Sports has also benefited from direct sponsorships to the leagues and individual sports team from the industry, something no longer tenable and whose effects are there to see.
– The writer is a policy and legal communications consultant


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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.

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

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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