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Daily Nation : February 19th 2014
32 | BUSINESS INFRASTRUCTURE | Nations move to tap into natural resources Kenya to invest Sh6bn in proposed Uganda refinery Cash to represent a three per cent stake although final deal is yet to be reached, according to Energy Principal Secretary BY ZEDDY SAMBU email@example.com K enya will invest Sh6.38 billion for a three per cent share in the proposed oil refinery in Western Uganda. Energy Principal Secretary Joseph Njoroge said the government is awaiting details of the $2.5 billion (Sh213 billion) refinery plans before a final decision is taken. It is understood that Rwanda may have paid for its share of equity following an invitation last September by Uganda to all EAC members. Buy small shares The refinery will be developed on a public-private partnership basis, where the East Africa countries will hold 40 per cent shares while the private sector takes 60 per cent. “The Government of Uganda has invited both Kenya and Rwanda to buy small shares in the refinery. The offer is about three per cent, which will have no effect on our other plans,” said Mr Njoroge on telephone. Under the Lapsset Corridor Project, Kenya plans to set up two refineries, at the Lamu port and in Isiolo. The 2.5 Billions of dollars that the proposed Western Uganda refinery is projected to cost. The country has invited neighbours to buy a stake in the plant 60,000 The expected capacity input in barrels that the plant will process in a day when fully operational latter could, however, be affected by Uganda’s decision to set up its own plant given that it was proposed to supply Eastern Africa market. Uganda plans to develop a refin- ery with an input capacity of 60,000 barrels per day (bpd), starting with a capacity of 30,000 barrels per day by 2018, which will be enhanced to 60,000 barrels per day before 2020.The first phase will supply oil to Uganda, Rwanda and Burundi with the second expected to produce enough for the whole of the Eastern Africa market. “We have asked for the feasibility study and economic details for assessment and then decision making,” Mr Njoroge said. Uganda, which is acquiring 29 square kilometres of land for the refinery, has hired US energy investment firm, Taylor DeJongh as transaction advisor charged with sourcing for the lead investor and financing. UK energy firm, Foster Wheeler Energy Ltd conducted a feasibility study, which recommended that a refinery was a more commercially viable option with a net present value of $3.2 billion at a 10 per cent discount rate, and an internal rate of return of 33 per cent. Oil and gas policy Following confirmation of com- mercial oil reserves in 2006, Uganda initiated a national oil and gas policy in 2008 to address the entire spectrum of exploration, development, production and valuable utilisation of the country’s resources. The Ministry of Energy and Min- eral Development later formulated a refinery development programme to guide the set up of a refinery. The programme is in line with the East African regional refineries development strategy that was adopted by EAC partner-states in 2008. ALSO NOTE EAC projects in the pipeline Kenya: The country plans a Sh255 billion pipeline to connect the Turkana oil fields and the port city of Lamu; specifications are yet to be known. Uganda: Construction of Uganda’s refinery will costs Sh212.5 billion ($2.5 billion). Joint: Lapsset Corridor Project, with a total of seven infrastructure project components proposes a modern refinery at the port of Lamu. FILE | NATION Kenya oil refinery plant in Mombasa. The country will invest over Sh6 billion in a proposed plant in Western Uganda. Various parcels of land have been allocated to private developers” Auditor-General DAILY NATION Wednesday February 19, 2014 SURVEY BY GLOBAL COUNCIL Chinese love for gold overtakes that of Indians for the first time. Page 36 Developers allocated rail firm’s land, says audit BY NATION REPORTER A new audit report on the Kenya Railways Corporation has revealed that more than six acres of land belonging to the state body have been illegally allocated to private developers. Affected railway stations are Limuru and Kikuyu, which according to the Auditor-General, have lost between 0.75 and three acres of land during the year ended June 30, 2012. The audit report has blamed the Commissioner of Lands and local authorities, which have since been disbanded due to the illegal allocations. Without consent “Various parcels of land have been allocated to private developers by either the commissioner of lands or local authorities without the consent of the corporation. Land measuring three acres within Limuru Railway Station was allocated to private developers. “Similarly, private buildings have been put up on another piece of land measuring two acres within Kikuyu Railway Station,” Auditor General Edward Ouko said. The report further questions payments totalling Sh1.4 million that were made as sitting allowances to wananchi who attended board or committee meetings of the corporation during the year. “The allowances were paid to the representative of the attorney general and that of the inspector of state corporations who were involved in the restructuring of KRC,” said Kenya Railway managing director Atanas Maina. Casino owners challenge 20 per cent tax in court BY NATION CORRESPONDENT Casino owners have moved to the High Court to suspend a decision by the government to levy 20 per cent on the value of winnings. In a certificate of urgency filed yesterday, the gaming club owners are demanding a restraint order countering KRA’s tax demands, saying, it is malicious and a wrong move meant to bring down private businesses. “Tourists with gambling as part of their itinerary will shun Kenya as a tourist destination since they lack the necessary tax documents such as personal identity numbers (which is a new requirement) thus making them ineligible to participate in gaming activities,” they said in supporting documents. They now want the court to suspend the section of the Finance Act 2013, which brought into force the new tax pending the hearing and determination of their application. “We were not granted audience to present our views more elaborately nor did the National Assembly committee consult the public over this issue of taxation,” the owners contended. Proprietors maintained that it was nei- ther realistic nor practical to collect and administer the 20 per cent withholding tax due to several factors such as player habits, multiplicity of bets and game dynamics.
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