Public endorses Tarda, Mumias sugar plant

By Standard Reporter

Mumias Sugar Company has moved a step closer to realising its dream of setting up a state-of-the-art sugar factory in the Tana Delta in Tana River District.

Ongoing public hearings, which kicked off last week, saw local people endorse the project. They complained it was taking too long to get going and then gave their conditions for their acceptance of it.

Leading the local people with an endorsement of the proposed factory, complete with an expansive nucleus estate was Assistant Minister Mr Danson Mungatana.

Mungatana told the public hearings that land totalling 200,000 hectares had been set aside at the ADC’s Galana Ranch for the local pastoralist community to give pasture and water for their animals.

A major criticism levelled against Mumias has been that the factory’s 20,000-hectare nucleus estate will deprive the pastoralists of land for pasture and water for their animals and therefore strangle them economically.

While Mungatana described the proposed factory as godsend, he warned: "We will give you total support but we want the company to be known as Tana River Sugar Company Ltd and in which local people will be allowed to own shares."

Most of the people who aired their views in the public hearings in Ngao, Garsen, Kipini and Witu which is in Lamu District, urged Mumias Sugar and the Tana and Athi Rivers Development Authority to train local people in the running and management of sugar mills.

They complained that employment was a major challenge in the area and expressed optimism that the sugar factory and its nucleus estate would play a significant role in alleviating this and other challenges in Tana River District.

There was a word of caution here, too: "We don’t want the company (Mumias Sugar) to hire other people while we have well-educated people as has happened with previous projects. Hire our people," said an elder, Mr Ali Dhadhu.

Mr Aggrey Wanjala, the Mumias Sugar Company chief who is in charge of project implementation at Tana River, assured the local people that the company would work closely with them and take a leading role in addressing the challenges facing them.

Mumias Sugar officials say that when operational, the factory will have a power generation plant and employ directly and indirectly an estimated 30,000 people.

They told the public hearings that the feasibility and environment impact assessment studies for the sugar project are at an advanced stage.

The hearings are part of a sensitisation and consultation process Mumias Sugar has been carrying out to get the local peoples’ buy-in ahead of the project’s commencement.

State reclaims Ramisi sugar property

By Philip Mwakio

The Government has invoked the compulsory acquisition clause and seized the Ramisi Sugar Factory land that changed ownership soon after its collapse in the 80s.

This is ahead of its intended revival after a series of unfulfilled promises by the previous Government.

Lands minister Prof Kivutha Kibwana said Sh64 million had already been paid out as compensation to a financial institution that had taken over the land after the original owners had defaulted in servicing a loan it had acquired.

A new strategic investor in the factory project — yet to be identified — will be allocated 15,000 acres while an additional 8,000 acres will be hived out to outgrowers. Firms from Karachi, Pakistan, have shown interest in the project, but are demanding to start factory with nucleus farm.

Associated Sugar Company, which is owned the Ramisi Sugar Factory, had taken a Sh300 million loan from Bank of India before it defaulted on repayment. The land held as collateral by was taken over by the bank.

Addressing landowners in Ramisi in Kwale District, Kibwana said sugar cane farming will commence soon after a strategic investor to revive the factory is identified.

Ramisi Sugar Factory was founded on a parcel of land in 1927 and was run by the Madvhani Group from 1947 to 1987 when it collapsed. It employed over 3,000 workers and operated on land measuring 45,000 acres, offering support to 4,000 famillies who relied on cane farming.

A farmer in the area, Mr David Ndirangu, said the revival of Ramisi was long overdue.

"While the Government has moved to bail out Muhoroni, Chemelil and Miwani Sugar Factories that at one time were facing imminent collapse, Ramisi was left out,’’ he said.

New investment banker licensed

By Tom Mogusu

Renaissance Capital (Kenya) has been granted a licence by the Capital Markets Authority (CMA) to set up investment banking operations in Kenya.

The announcement means that the firm joins seven other companies that have so far been licenced by the CMA to carry out investment banking business.

The firm has also hired Mr Maina Mwangi from Standard Bank, South Africa, to be in charge of its investment banking business in Kenya. "We think Kenya is on a long term convergence curve," Mr Stephen Jennings, CEO of the Group said.

Reinassance will also apply to become a member of the Nairobi Stock Exchange (NSE). The NSE is reported to have set the reserve price for the prestigious position at Sh150 million, though it is also holding out for bids in the region of Sh300 million for the two positions that are now vacant.

The winner will join an exclusive club of 18 stockbrokers who last year shared an estimated Sh4 billion at a time when the market was going through one of its biggest boom in recent years.

Renaissance group’s commitment to invest US$1 billion into Africa is on track and should be completed in 2008, Jennings said.

"We are seeing what happened in Asia being replicated here in Kenya. We hope to play a bigger role in the growth of this economy in the long term".

The CEO said the firm is angling for key businesses in financial services, telecommunications, consumer services and infrastructure.

"We are looking at industries that are long term by nature because we are here for a long term regardless of what happens over the next 15 years," he said.

Mr Amish Gupta, the Director Renaissance Capital Kenya Limited, said the firm’s Investment banking licence had been given in record time, an indication that the CMA is committed to deepening the capital markets in Kenya.

Telkom to lay off 4,400 staff, and tackle Sh69b debt

By John Oyuke

Telkom Kenya plans major debt and project swaps to rid it of liabilities amounting to Sh68.8 billion as part of restructuring before privatisation.

The parastatal says it has finalised plans to lay off a further 4,421 employees as part of the process before the end of this year.

Managing director, Mr Sammy Kirui said Phase III of staff rationalisation, whose criteria has been defined by an external human resources consultants, Pricewaterhousecoopers, is scheduled to be completed by the end of September 2007 at an estimated cost of Sh3.8 billion.

Chief Finance Officer, Mr David Muriithi said Telkom Kenya is determined to have a debt-free balance sheet before the entry of a strategic investor with the expectation that this will increase the company’s value.

"As a consideration of the acquisition (transfer) of the 60 per cent shareholding held by Telkom in Safaricom, the Government will support the funding and swapping of various liabilities and projects in Telkom Kenya," he said.

They were speaking during the ongoing Telkom Kenya Privatisation Bidders Conference in Nairobi.

Funds available

Mr Solomon Kitungu, Director of Reforms in the Ministry of Finance, said the Government has already factored the funding initiatives in the current budget, with Sh41 billion made available towards the process.

Seven bidders have shown interest in the Telkom privatisation, which would see the Government sell 51 per cent of its interest in the utility.

The firms are British Telecom, France Telkom, and Reliance Communications, Tata Holding and MTNL, all of India, Alcazaar of Kuwait and Telkom SA.

Muriithi said support from the Government as a result of the unbundling of Safaricom will come in form of cash injections and debt swaps.

This, he pointed out, would help Telkom deal with issues of tax liabilities, pension fund deficit, staff restructuring, loans and Government debtor balances, new Telkom mobile licenses and bridging finances.

In clearing its liabilities, Telkom Kenya would have to pay Kenya Revenue Authority (KRA) Sh36.3 billion in principal tax of Sh15.4 billion and outstanding interest and penalties on tax amounting to Sh20.9 billion.

It would also need to settle a pension liability of estimated at approximately Sh10 billion and repay bridging finance – phase II of Sh5.8 billion. Other liabilities include retrenchment phase III financing of Sh3.8 billion, Safaricom loan principal Sh2.2 billion ($33m) plus interest of Sh3.8 billion.

This in addition to Safaricom interconnection interest of Sh1.3 billion, Paris Club and other loans paid by Government amounting to Sh3.8 billion. There is also the Government debt on telephone and data lines amounting to Sh3.4 billion, new mobile license (US$55m), which requires Sh3.9 billion and liquidity and investment support of Sh3.5 billion.

IFC pledges to invest Sh2 billion in cable project

By Alari Alare

The World Bank’s private financing arm is set to invest Sh2.1 billion ($32.5 million) in the East African Submarine Cable System (Eassy).

The money will be chanelled from the International Finance Corporation (IFC) through the West Indian Ocean Cable Company as a $18.2 million senior loan and a $14.5 million standby loan. WIOCC is a Mauritius-registered special purpose vehicle created to raise funding for Eassy.

The cable is a landmark fiber-optic cable project set to connect 21 African countries to each other and the rest of the world with high-quality Internet and international communications services.

The total cost of its construction is estimated at $235 million (Sh16 billion). Other financing is expected to come from private operators and development institutions.

Eassy is a partnership among 26 telecommunications operators, the majority of which are African firms. The cable is expected to transform the telecommunications landscape in the region as it improves access for 250 million Africans and substantially reduces costs for consumers and businesses. Construction is expected to begin by the end of year, with the cable fully operational by the beginning of 2009.

To expand the benefits of the new cable and stimulate traffic, IFC is coordinating its efforts with the World Bank, which is financing a complementary system of terrestrial backhaul and backbone networks through the Regional Communications Infrastructure Programme.

"The Eassy cable will complete Africa’s integration into the global communications network, with significant development impact for the people of East Africa and the larger region," said IFC Executive Vice President and Chief Executive Officer, Mr Lars Thunell.

The IFC’s annual investments in sub-Saharan Africa have doubled this year to a record $1.4 billion from $700 million previously.

Consumers along the east coast of Africa typically pay between Sh13,400 ($200) and Sh20,100 ($300) a month for Internet access. These prices, some of the world’s highest, have an adverse economic impact.