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Kenyan Geothermal power continues its expansion

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Kenya Geothermal Energy Project

Kenya continues to attract interest with its extensive geothermal energy schemes.

In the space of only a few years, Kenya has shifted its entire focus on energy, and created unprecedented growth in geothermal production. While hydro-electricity has long been the nation’s main source of power, the Kenyan government now hopes that by 2030 only 4% of the country’s energy will be hydro-electric. The notoriously unreliable rains of East Africa make a shift to geothermal power a sensible choice, and Kenya’s Great Rift Valley is proving to be a giant source of energy.

Power from within

It was back in the 1950’s when the first exploratory wells were dug in the Rift Valley. The Olkaria region of the area was quickly ascertained to have serious potential for energy creation. Under the surface there is a seething mass of geothermal activity that blanketsthe area with hot springs and bubbling, sulfuric fissures. It is no surprise that the national park in which Olkaria is found is known as “Hell’s Gate.”

Within 10 years of the first drilling, the Kenyan government, working alongside the UN, began more in-depth assessments of the energy potential that bubbled beneath the ground. By 1981, the first geothermal power plant had opened in Olkaria, with an initial output of 45 MW.

Kenya geothermal energy

Kenya geothermal energy

Harnessing this natural energy became a large project, with over $1 billion of investment over the next 20 years. However, it was an investment worth making, as Kenya’s energy demands have rocketed as the nation develops. Considering that in 2008 only 25% of the population had access to electricity, this demand was only going to increase. As such, the government developed its Vision 2030 program.

A bolder vision

Vision 2030 was launched in 2008 to outline Kenya’s plans for energy expansion that would facilitate rapid economic growth. However, droughts highlighted the unreliable nature of Kenya’s hydro-electric dependency, and in 2013 the project was updated with Olkaria’s geothermal plants the priority.

Olkaria expanded rapidly in the 21st century, with Olkaria II opening in 2003 and expanding its production in 2013. Olkaria III hosts a 110 MW generator to add to the combined power of 290 MW coming from Olkaria sites I and II.

As recently as 2014, Olkaria opened up site IV that hosts a further 140 MW of power, as the company KenGen has worked closely with multinational companies to further its production.

KenGen is the company responsible for Kenya’s geothermal production, and as a majority government owned body it has made massive inroads into expanding the energy supplied by the Rift Valley’s activity. Alongside companies like Toyota and Toshiba, KenGen has created a huge increase in the energy produced from Olkaria.

The financiers supporting its growth include the World Bank and the European Investment Bank, which hope that affordable, green energy will have even more far reaching effects. Diarietou Gaye, the World Bank’s country director for Kenya, said, “That’s why we are investing in the energy sector… [it] is a key infrastructure investment in the fight against poverty.”

This is borne out by figures quoted from KenGen CEO, Albert Mugo, who stated that the increased production from Olkaria had seen a 30% drop in energy costs for consumers since 2014.

Continued Growth

The expansion of Kenya’s geothermal power base is far from complete. The development of Olkaria V is already underway, and there are plans for an Olkaria VI site. Moreover, the fact that Kenya is now the 8th largest producer of geothermal energy in the world has attracted interest from neighboring nations. Ethiopian president Hailemariam Desalegn recently visited Olkaria, and the two nations have agreed to work side by side in the development of renewable energy.

Geothermal energy looks set to be at the forefront of Kenya’s energy revolution, and will surely play a vital role in the country’s continuing development.

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Strategic Fuel Fund’s bid for Chevron South Africa assets faces probe

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s state-owned Strategic Fuel Fund (SFF) will face an investigation by its shareholder for making a bid to buy Chevron’s local assets without seeking clearance, a government official said on Thursday.

SFF, which manages crude oil reserves in Africa’s most industrialised country, said on Wednesday it had approached the oil major with an offer to buy its 75 percent stake in Chevron’s 110,000 barrels per day refinery and other downstream assets.

“An offer to purchase by an entity of the Department of Energy requires express consent from the Minister of Energy as the ultimate shareholder representative. This was neither sought nor obtained,” Director-General at the energy department Thabane Zulu said in a statement.

Zulu said his department will investigate SFF for its “complete disregard for governance processes”.

SFF officials were not immediately available to comment.

Chevron’s officials in South Africa did not immediately respond to request for comment.

Chevron, which has had a presence in South Africa for more than a century, said in January it would sell its business in the country, including its refinery in Cape Town, after making similar sales in Nigeria due to weak oil prices.

Besides the refinery, Chevron also has interests in a lubricants plant in Durban on the east coast. Its network of Caltex service stations makes it one of South Africa’s top five petroleum brands, according to its website.

 

(Reporting by Tiisetso Motsoeneng; Editing by James Macharia)

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MTN Nigeria wins 2.6GHz spectrum auction

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Africa’s biggest mobile telecoms operator MTN’s Nigerian subsidiary has won a 10-year radio spectrum licence for mobile broadband services, it said on Wednesday.

The award comes after MTN said earlier this month that it would more than double its spending in Nigeria in the current fiscal year after agreeing to pay a heavily reduced fine of $1.7 billion for missing a deadline to deactivate more than 5 million unregistered SIM cards used on its Nigerian network.

The Nigerian Communications Commission (NCC) had earlier announced that MTN had emerged as the sole approved bidder for the new licence, MTN said in a statement.

“With the 2.6 GHz band, we expect to roll out and provide the full range of LTE (Long Term Evolution mobile broadband) services to Nigerians, empowering Nigeria with the latest mobile broadband technology,” said MTN Nigeria Chief Executive Ferdi Moolman.

“This licence acquisition further demonstrates MTN’s abiding faith in the future of Nigeria and the resilience of the Nigerian economy.”

MTN is the largest mobile phone operator in Nigeria with 57 million subscribers, and the country accounts for about a third of its revenues.

MTN’s plan will see the roll out 3G network population coverage from 67.23 percent to about 90 percent. The aggressive rollout of fibre to six Nigerian cities by the end of 2016 will enable the connections.

 

(Reporting by Nqobile Dludla; Editing by Greg Mahlich)

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Kenya’s bourse scales back its derivatives ambitions

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s Nairobi Securities Exchange will launch trading of derivatives by the end of 2016, after a series of delays, but plans to start with fewer instruments than originally planned, its chief executive said.

The bourse, which is a key entry point for foreign funds looking for exposure to fast-growing East Africa economies, initially planned to roll out trading in the first half of last year with more products including currency futures.

“We are now at a very close point. Certainly this year we should be able to get the market up,” Geoffrey Odundo told Reuters in his office on Wednesday.

Trading would start with a futures contract on the NSE-25 share index, a tool used to hedge investment risk. Trading in single stock futures and currency futures, originally expected to start at the same time, would begin at a date still to be determined, he said.

Odundo attributed the delays in launch of trading to the slower-than-expected pace in setting up the infrastructure to trade derivatives and educate the market about its benefits.

Kenya will be the second in Sub-Saharan Africa to start trading of derivatives after South Africa, he said.

“Futures contracts are a bit sophisticated. It is not like spot trading. You really have to know what you are trading,” Odundo said.

 

DIVERSE ECONOMY

The NSE is also considering the possibility of offering agriculture contracts, once the derivatives market takes off, but those plans were at an embryonic stage, he said.

He said the recent commodity price drop had curbed equity trading volumes at the bourse this year, with daily volume averaging $3-4 million, half of the daily levels seen at the same time last year.

But Kenya’s diverse economy, which does not rely on a particular commodity, has helped the situation a little, he added.

“Our decline has not been as rapid as the other markets which have got commodity trades like Nigeria and Angola,” he said about volumes, without offering details.

Valuations of listed firms, as measured by price to earnings ratio, had however fallen, which together with a stable currency, could boost interest among foreigners.

“Most of them are at 8-10 (PE ratio) and historically they have been as high as 15. These are good entry points for them,” Odundo said.

On the other hand the bond market was booming, with monthly volumes more than doubling last month from the same period last year, and on course to more than triple in June, thanks to falling yields on government debt.

The yield on the benchmark 91-day Treasury bill has fallen by more than 300 basis points in recent weeks.

 

(By Duncan Miriri. Editing by Edmund Blair and Gareth Jones)

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Ugandan shilling steady as commercial banks’ panic buying slows

Comments (0) Africa, Business, Latest Updates from Reuters

KAMPALA (Reuters) – The Ugandan shilling was stable on Wednesday as a recent panic purchase of dollars by commercial banks subsided after a central bank intervention on the sell side earlier in the week and subdued demand among corporate clients.

At 1002 GMT commercial banks quoted the shilling at 3,400/3,410, little changed from Tuesday’s close of 3,405/3,415.

 

 

(Reporting by Elias Biryabarema; Editing by George Obulutsa)

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South Africa’s slowing growth to be hit by Brexit: Reserve Bank governor

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JOHANNESBURG (Reuters) – The governor of the South African Reserve Bank said on Tuesday that although the decision by Britain to exit the European Union would not cause a recession, already slowing economic growth would be hit.

Speaking to Bloomberg TV in Portugal Lesetja Kganyago said: “We would not venture into a recession at this stage, but there is no doubt that it will slow the South African economy from the weak growth that we already have.”

Finance Minister Pravin Gordhan said on Sunday financial market volatility caused by Britain’s decision to quit the EU, which sent the rand tumbling, could hurt investment flows into South Africa.

Britain voted last week in a referendum to leave the EU, wiping billions of dollars off world equity markets.

“It has affected sentiment and investors were looking for safe assets. We are not seen as one of the safe assets,” Kganyago said.

South Africa’s economy is barely growing, hobbled by power cuts last year, low commodity prices, drought and political ructions that have unnerved investors.

Africa’s most advanced economy contracted in the first quarter, putting it on track for its first recession in seven years.

 

(Reporting by Zandi Shabalala)

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Tanzania sees economic growth picking up to 7.4% in 2017

Comments (0) Africa, Business, Latest Updates from Reuters

DAR ES SALAAM (Reuters) – Tanzania’s central bank said on Tuesday it expects economic growth to accelerate to 7.4 percent in 2017 from an estimated 7.2 percent this year, driven by construction, communications and finance.

The Tanzanian economy, East Africa’s second-biggest, grew 7 percent last year.

“The macroeconomic objectives of the government aim at achieving a real gross domestic product growth of 7.3 percent in 2016/17 based on the projected growth of 7.2 percent in 2016 and 7.4 percent in 2017, while maintaining inflation at single digits,” the Bank of Tanzania said in its latest monetary policy statement.

“The bank will continue pursuing prudent monetary policy in 2016/17 to keep inflation close to the medium-term target of 5 percent, while ensuring that the liquidity level is consistent with demands of various economic activities.”

Tanzania’s year-on-year headline inflation rate edged up to 5.2 percent in May from 5.1 percent in April, as prices rose for non-food items.

The government said it plans to increase spending by 31 percent in its 2016/17 fiscal year to $13.51 billion to finance infrastructure and industrial projects.

 

(Reporting by Fumbuka Ng’wanakilala; Editing by George Obulutsa, Larry King)

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Tunisia central bank holds key interest rate unchanged at 4.25 percent

Comments (0) Africa, Business, Latest Updates from Reuters

TUNIS (Reuters) – Tunisia’s central bank has kept its key interest rate unchanged at 4.25 percent, an official in the bank said on Tuesday.

The bank last cut its main interest rate in October from 4.75 percent, in a bid to boost economic growth as inflation fell.

 

(Reporting By Tarek Amara; Editing by Janet Lawrence)

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Old Mutual says could dual-list wealth, emerging markets units

Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Old Mutual said on Tuesday its preferred option after splitting into four would be to have two of the new companies listed on both the London and Johannesburg stock exchanges.

The Anglo-South African company expects to complete its restructuring by the end of 2018.

The changes include carving out its emerging markets operations to create a new South African holding company and a company that would mainly comprise the group’s wealth operations.

Chief Executive Bruce Hemphill said the firm had also received approaches for its businesses from industry and private equity players.

“We are still going through a process,” he told Reuters by phone. “We have settled on a preferred route, (but) that does not preclude the possibility of someone coming along with an offer.”

Old Mutual Wealth was valued by analysts earlier in the year at 3-4 billion pounds ($4.01-$5.35 billion).

Hemphill said despite recent market fluctuations following last week’s referendum vote for Britain to leave the European Union, Britain was still a “sure bet” in the longer term.

He declined to comment on the sale of Old Mutual Wealth’s Italian unit, which has attracted four private equity bidders in its final stages, sources told Reuters last week.

But he said Old Mutual was going through a process of “cleaning up” the Italian wealth business.

The firm said it plans to distribute a “significant proportion” of its stake in Nedbank Group Ltd to the shareholders of the new South African holding company.

The FTSE 100-listed company also said it plans to continue cutting its 65.8 percent stake in U.S. asset management firm OMAM.

Old Mutual said it faces headwinds from weakness in the South African rand and from lower equity markets, but said gross sales in the year had been strong.

Old Mutual shares were up 4.6 percent to 186.3 pence at 0826 GMT in line with a bounce in financial stocks following a severe sell-off this week.

Old Mutual will hold its annual general meeting on Wednesday, along with an extraordinary general meeting where shareholders will vote on Hemphill’s proposed 1,000 percent bonus.

($1 = 0.7483 pounds)

 

(By Noor Zainab Hussain and Carolyn Cohn. Reporting by Noor Zainab Hussain in Bengaluru; editing by Sunil Nair and Jason Neely)

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Egypt could secure $10 bln loan from IMF: central bank

Comments (0) Business, Latest Updates from Reuters, Middle East

By Ehab Farouk

CAIRO (Reuters) – Egypt’s central bank said on Monday it could secure some $10 billion from the International Monetary Fund (IMF) by agreeing a structural reform programme but has yet to make any formal request to do so.

Talks over a possible loan half that size have faltered in the past and analysts say an IMF deal might require reforms that the government could find politically difficult to implement in a country where tens of millions live hand to mouth.

The central bank statement came in response to comments by a cabinet minister, who told Reuters on Monday that Egypt had started negotiations with the IMF last week for a $5 billion loan. The minister said the central bank was leading the talks.

“There is a delegation from the IMF that might visit Egypt next month to continue the negotiations,” the minister, who holds an economic portfolio, said by telephone.

The central bank said in a statement that while it had not formally made a request to negotiate a structural reform programme, it was in constant contact with the IMF and could secure $10 billion should it opt to apply.

“The numbers mentioned are incorrect. If there was a need to request a reform programme, Egypt would be capable of obtaining twice the figures mentioned,” the statement said.

The IMF said that its officials “maintain close dialogue with the Egyptian authorities” and that the lender stood ready to help should Egypt make a financing request.

“The size of any financial arrangement would depend on Egypt’s financing needs and on the strength of its economic program,” IMF Mission Chief for Egypt, Chris Jarvis, told Reuters in emailed comments.

Egypt’s economy has been struggling since a mass uprising in 2011 ushered in political instability which drove away tourists and foreign investors, major foreign currency earners. Reserves have halved to about $17.5 billion since then.

The dollar shortage has forced Egypt to introduce capital controls that have hit trade and growth.

The central bank said in its statement Egypt was pushing ahead with its existing reform programme, which includes plans for Value Added Tax (VAT) and subsidy cuts which were put on hold when global oil prices dropped.

A VAT bill is in its final stages but could face resistance in parliament on concerns over inflation that has hit seven-year highs since the currency was devalued by 13 percent in March.

Egypt’s reform programme formed the basis of a $3 billion three-year loan deal with the World Bank that was signed in December. But the cash has yet to be disbursed as the World Bank waits for parliament to ratify economic reforms including VAT.

“Egypt will have to proceed with some painful reforms to guarantee that the loan will work this time,” CI Capital economist, Hany Farahat, said.

“We still haven’t approved the FY16/17 budget, or the VAT. We need another devaluation round for the Egyptian pound … we need the investment environment to be reformed and capital controls to be eased for foreign investors.”

(Additional reporting by Lin Noueihed; Writing by Asma Alsharif and Lin Noueihed; Editing by Louise Ireland)

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