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The East African : June 30th 2014
The EastAfrican BUSINESS JUNE 28 - JULY 4, 2014 Legal issues in Umeme sha≥e sale By HALIMA ABDALLAH Special Correspondent THE SELLING of majority shares by Umeme Holdings Ltd could open avenues for renegotiation of concession. Umeme, listed in Kampala and Nairobi in 2012, is a major investment of Actis, a company registered in the United Kingdom. Recently, Actis sold its shares worth Ush33.8 billion ($12.9 million) to Ugandans and other investors. Investec Asset Management, a South African firm, is the majority shareholder, with 18.47 per cent. But queries have been raised as to the legality of the sale of shares by a company that a parliamentary investigation found not to have been properly registered. In March, parliament passed a unanimous vote recommending that Umeme’s 20-year concession be terminated on grounds of underperformance, unfavourable contract terms towards the government and lack of proper registration as required under the Company’s Registration Act. Parliament also voted to ter- minate the concession for South African-based electricity generation company Eskom, which is performing similar functions as Uganda Electricity Generation Company Ltd. Eskom operates two power plants in Nalubaale and Kiira. Best option Sources said the legal issues that parliament unearthed explain why the government is treading carefully on the matter. “The recommendation is with the executive and the last communication we got was a termination. If there is a change in position let them tell us, but for now we will wait for the executive to take action,” said Umeme spokesman Henry Rugamba . “Renegotiation is the best op- tion because termination could be more costly. That is the thinking of the government,” said Simon D’Ujanga, the State Minister for Energy. After the probe team failed to find proof that Umeme was a registered consortium at the registry as required by the Companies Act, it recommended that the contract be terminated. “We needed to provide the gov- ernment with leverage. The aim was to terminate the contract to allow a renegotiation of a better contract,” said Oboth Oboth, who chaired the probe team. Umeme was formed in 2004 by two companies: CDC Globleq Holdings Ltd with a 56 per cent shareholding, and Eskom Enterprises Ltd with 44 per cent. In 2006, Eskom sold it shares to Globleq. In October 2009, ownership of Globleq was transferred to CDC Group of the UK. GUIDE FOR MOMBASA AND NORTHERN CORRIDOR New port charter to ease operations T≥anspo≥t costs to come down, delays in clea≥ance of goods minimised By CHRISTABEL LIGAMI Special Correspondent A unified approach for clearing goods at the port of Mombasa and along the Northern Corridor will be adopted by Kenya this week, in efforts to restructure transport operations. Kenya’s President Uhuru Kenyat- ta will launch the Port of Mombasa and Northern Corridor Charter at Berth 1 on June 30. Under the charter, institutions with operations at the port and along the corridor — the Kenya Ports Authority, Kenya Revenue Authority and Kenya Bureau of Standards — will be guided by key performance indicators. “The charter will establish a per- manent basis of collaboration that will bind the port community to perform specific actions, and collective obligations under set targets and time lines,” said Justus Nyarandi, general manager of KPA. In efficient trade corridors, trans- port costs make up 4 per cent of the cost of goods. However, constraints at the port of Mombasa and along the Northern Corridor drive transport costs to about 30 per cent of the cost of goods. Past attempts to address chal- lenges at the port have focused only on the Kenya Ports Authority and excluded other statutory bodies and private sector players who are an important part of trade facilitation. The new charter will address issues of alignment among port community members in discharging their mandates in trade facilitation, insufficient capacity and an ineffective operational model at both the port terminal and hinterland transport channels. It will also cover the time taken to clear goods, insecurity, non–tariff barriers along the Northern Corridor, and corruption and unethical practices at the port. The charter has six goals: Transforming Mombasa port into a high- 37 A weighbridge at Mtwapa in Kenya. A new charter is set to reduce the cost and time of transporting goods. Picture: File performing landlord port by 2016; achieving an average of 120,000km coverage per truck per annum; growing cargo offtake by rail to above 30 per cent of throughput by June 2016; increasing liquid bulk holding capacity to 11,000,000 metric tonnes by December 2014; integrating all port community members’ systems into the Kenya National Electronic Single Window System by December 2014; GROWING TRAFFIC The current throughput utilisation at Mombasa port is at over 90 per cent of full capacity; the most significant growth was in containerised traffic that grew more than 10 per cent. It is expected that charter container traffic for the region through the port will continue to grow by 10 per cent per annum, with all other traffic growing by 5.5 per cent per annum. Over the past decade, the port has recorded significant growth in traffic volumes with container traffic increasing by an average of 6.8 per cent per annum from 12.9 million tonnes in 2004, to 21.9 million in 2012. and achieving 70 per cent cargo throughput through the green channel. Over the past five years, Mombasa port’s traffic throughput has grown by an average of 7.5 per cent per annum — from 16.4 million tonnes in 2008 to 21.9 million tonnes in 2012. Launched in Kenya recently, the Single Electronic Window System will be recast to ensure that EAC revenue authorities are integrated for information sharing, and to facilitate the release of cargo at the first point of entry. Chris Kiptoo, TradeMark East Af- rica Kenya’s country representative, said the charter seeks to accelerate the realisation of the potential of the Northern Corridor and spur the region’s economic growth. “The port charter has identified four distinct but interdependent pillars in the achievement of these goals, which should be implemented six months upon the signing of the port charter,” said Dr Kiptoo. The first pillar will require KRA to work on a model transforming Mombasa port into a high-performance landlord port through road, rail and pipeline channels. “This transformation will not only create room for specialised service providers, but also enable KPA to focus on infrastructural adjustments and long-term develop- 21.9 m Tonnes of throughput at Mombasa port in 2012, up from 16.9 million tonnes in 2008 ments, and handle the projected growth in cargo throughput,” said Dr Kiptoo. The second pillar will be on port efficiency and will also require KRA to move beyond lengthy manual processes, a wanting IT platform and a near-lethargic work culture. “KRA will be required to actual- ise paperless trading through the single window system. The Kenya Electronic Single Window System will allow parties involved in the trade and transport sector to lodge standardised information and documents with a single entry point to fulfil all import, export and transit related regulatory requirements,” Dr Kiptoo added. The third pillar is expected to drive planned initiatives, and the fourth pillar will facilitative regulation and oversight engagement of the trade process. “All these pillars will be imple- mented by the stakeholders involved within six months of signing of the charter,” he said. Chambe≥ leade≥s call on EAC to exploit unity By JULIUS BARIGABA The EastAfrican AT JUST 3.2 per cent, Africa’s share of global trade volume is small despite its vast natural resources. Now global trade leaders are focusing on the EAC and the markets around the bloc to work towards full economic and political integration. They argue that governments need to improve East Africa’s business environment and make the right investments in human capital. Besides opportunities for EAC products in the global market, the attraction is that the 140 million-strong EAC market is Africa’s intraregional trade powerhouse, according to a 2013 study by Ecobank. UNCCI president Olive Kigongo. Pic: Morgan Mbabazi At the recently con- cluded global trade forum in Kampala, Rwanda, Uganda, Kenya and Burundi feature among Africa’s top 20 intra-regional countries. The forum brought together leaders of the World Chambers Federation (WCF) — a global network of some 12,000 chambers and business communities, and an offshoot of the International Chamber of Commerce — and chambers of commerce from Kenya, Zanzibar, Ethiopia, Mauritius, Sweden and Australia. “In East Africa, borders are coming down, making international trade and investment easier. We know East Africa is focused on being the fastest growing region on the continent, hence a fertile place for investment,” said WCF chair Peter Mihok. About 50 delegates from Kenya attended the June 18-19 forum in Kampala — the first ever to be held in sub-Saharan Africa. The Kampala forum, hosted by the Uganda National Chamber of Commerce and Industry (UNCCI), was born out of a decision reached at last year’s executive meeting in Hamburg, to take its next summit to Africa, which is represented on the WCF executive by UNCCI president Olive Kigongo.
June 23rd 2014
July 7th 2014