A Political Kenya: Latest Politics and Kenya Economy News

1.0 Our attention has been drawn to the various news articles and public statements both in the electronic and print media regarding the magnitude of electricity bills for the Month of July 2008.

2.0 The Energy Regulatory Commission is empowered under Section 6(i) of the Energy Act, 2006 to," Set, review and adjust electric power tariffs and tariff structures, and investigate tariff charge, whether or not a specific application has been made for a tariff adjustment." In line with this mandate, the Energy Regulatory Commission (ERC) announced, on 26lh June 2008, new electric power tariffs and tariff structures which took effect on 1st July 2008.

3.0 The Kenya Power and Lighting Company (KPLC) and the Kenya Electricity Generating Company (KenGen) had submitted initialed Power Purchase Agreements (PPAs) seeking a review of KenGen bulk supply tariffs with effect from 1st July 2008 to the Energy Regulatory
Commission (ERC). At the same time KPLC had submitted to the Commission, an application for an upward adjustment of retail electricity tariffs with effect from the 1st July 2008.

4.0 In reviewing, approving and announcing the new tariffs and tariff structures, the Commission was guided by the following considerations:

• Electricity tariffs had not been revised since 1999. As a result, KPLC's cash flows have continually been eroded by inflation escalation clauses embedded in the Power Purchase Agreements (PPAs) for Independent Power Producers (IPPs).
• The need to provide sufficient revenues for new power generation and distribution projects to meet rising electricity demand projected at about 7% per annum.

5.0 There are several power generation projects planned and committed to come on stream in the next four years. These projects involve the development of over 600 MW in new power generation capacity. The planned projects include the following:

• A 35 MW geothermal plant by (Orpower4) an IPP which is due to be commissioned in October 2008;
• 25 MW supply from a 34 MW cogeneration plant by Mumias Sugar Co. using baggasse, due to be commissioned in January 2009;
• An additional 50MW medium speed diesel plant by Iberafrica due to be commissioned in April 2009; and,
• A 90 MW medium speed diesel plant at Mombasa by Rabai Power due to be commissioned by September 2009.
• KenGen is also working on progressively increasing hydro generation by an additional 70 MW by December 2011.
• Further, Olkaria II additional unit of 35 MW geothermal plants is being developed to come on stream by May 2010.

6.0 The Commission has already approved PPA's between the IPP's and the KPLC for the above mentioned projects. Power Production Licenses have also been issued.

7.0 With these considerations, ERC announced an average overall retail tariff increase of 24%. based on average 2007/08 fuel prices and generation mix.

8.0 Fuel Cost Charge refers to the cost of fuel oil used in electric power generation in a given month. The total fuel oil cost is divided by the total units (KWh) consumed in a particular month to get Fuel Cost Charge in Kenya cents/kWh that is passed on to all consumers. The fuel cost is
determined by two main factors - Generation Mix and Fuel Oil Prices.

(i) Generation mix: This refers to the percentage contribution of various power generation sources. Kenya's power supply system is from three main sources - Hydro, Geothermal and Thermal. In Hydro generation water is used to run turbines while in Geothermal underground steam is used to run steam turbines. Thermal generation uses imported fossil fuels to run power generation engines. The higher the percentage of thermal generation, the higher the Fuel Cost Charge and vice versa. Power generation in Kenya has been predominantly hydro based, but
the percentage contribution of thermal generation has lately risen steadily from 25% of total generation in January 2008 to 37% in June 2008.

Between May and June 2008, power generation from thermal power plants rose from 175 GWh to 196 GWh, an increase of about 12% in one month. This has happened mainly due to failure of the last long rains. Most of the hydro generation is from the Tana cascade. The water
inflows at Masinga and Kamburu dams have been very low compared to Long Term Average flows.

In addition, the country is generating a substantial portion of its electrical energy from Emergency Power Plants (EPPs) which use expensive Automotive Gas Oil (AGO). The normal thermal plants use lower cost Heavy Fuel Oil (HFO). The EPPs will be gradually phased out in the next 2 years as new regular plants are commissioned.

(ii) International Oil Prices: All petroleum requirements for Kenya are supplied through importation. Therefore any increases in the international prices of petroleum products are directly reflected in consumer prices. In the fifteen months to June 2008, the international price of Murban crude oil has increased from US$ 62.1 per barrel to US134.00 per barrel, an increase of115.8%. On July 11. 2008 the price of Brent crude hit a high US$ 147 per barrel, the highest ever.

9.0 The fuel cost charge has, therefore, rapidly increased over the last several months. The fuel cost adjustments were 284, 314 and 359 cents/kWh in March, April and May 2008 respectively. In June 2008, the Fuel Cost Charge was 649 cents/kWh reflecting the increases in both thermal generation and fuel prices.

10.0 It is anticipated that Fuel Cost Charge will decline as water levels in hydro dams improves. In addition the fuel cost charge is expected to decline further as the system incorporates on-coming lower cost generation plants and the EPP units are progressively retired.

11.0 The ERC will continually play its oversight responsibilities of ensuring that costs borne by electricity consumers are prudently incurred by the industry. ERC however encourages electricity consumers to adapt energy conservation measures such as switching to energy saving bulbs and practicing prudent energy-use habits.

Eng. Kaburu Mwirichia
Director General
Energy Regulatory Commission
First Floor, Integrity Centre
Miliman/ Valley Road

P.O. BOX 42681-00100
NAIROBI
Tel: +254-20- 2847000/200
Fax:+254-20-2717603

Email:info @ erc.go.ke
Website:www.erc.ao.ke

The Nairobi Water Company wishes to inform its esteemed customers that there has been a huge drop in water levels in our water storage at Thika (Ndakaini) and Sasumua dams due to failure of long rains.

Currently the storage at Ndakaini, where 80% of water to the city comes from, is less by 30% of the reservoir capacity of 70 million Cubic Metres.

To sustain the supply through the rest of the year March next rains, the normal supply from the dam must be controlled as required by the operation rules. And as there is very little flow from the rivers into the dam, the supply pi-water for treatment has reduced drastically.

Although a rationing programme had been issued and published in some of the dailies in May this year, the present situation on the ground may call for its further review with a view to distributing the water more equitably. This may lead to a small reduction in hours of supply for some customers- to be advised at an appropriate time.

In the meantime, the Company is taking the following measures to alleviate the anticipated crisis should the condition not improve:

• Controlling the stored volume of water to ensure it is sustained to the next rains
• Ensure available water is equitably distributed through rationing programme and water bowsers
• Calling on consumers to use water sparingly and enhance strict conservation measures
• Enhanced patrol on trunk mains to reduce water loss occasioned by vandalism Repairing leaks as soon as they are reported
• Replacing old network pipes to curb water loss through leaks Conducting aggressive underground leak detection and repair of the identified leaks

The Company would prefer that water for critical activities like domestic, industrial and commercial activities is available in reasonable quantities during the period and is appealing to consumers to practice the following water saving tips:

1. No watering of flowers will be done between 9am and 6pm.
2. No carwashes should operate within this dry period. Those flouting this rule will have their cars towed away and prosecuted. Car owners are therefore advised to clean their cars at home with rinsing water.
3. No domestic gardening with water directly from the tap. Use grey water for gardening. Avoid irrigation with sprinklers or hose pipes.
4. Business premises within CBD are advised against washing pavements with water from the wet risers.
5. Report any leaks, vandalism immediately to the Company on the following numbers: 557131/2/3, 552150 or 553737.
6. Check all leakages within the premises and have them repaired without delay. This will not only reduce their bills but will conserve water for the severely affected areas.

Your cooperation is of utmost importance to us.
Managing Director
Nairobi Water Company

Dear Waheshimiwa, Greetings,

We salute you as citizens of this great nation, Kenya. Whilst we are citizens of the Republic of Kenya, we have been endowed by providence with traditional, cultural and regional identities which raise specific issues that require our particular attention and action. That is why we further salute you as members of the Mt Kenya community.

We write you this open letter after observing with utmost concern the political direction that the region appears to be heading in the recent weeks. We are aware that you have daunting responsibilities as elected leaders. Besides your national legislative obligations, your constituents look upon you to guide their political, social.economic and development agenda. As Waheshimiwa, you are the representatives of the collective aspirations and hopes of the people that you represent.

Succession Talk
Of late however, these collective aspirations and hopes have been reduced to one item-the clamour for political power, succession bickering and jockeying for prominence. Your noble calling to serve the people has been relegated to play second fiddle to your personal dreams and ambitions. All of a sudden, it is no longer about the people who turned out in large numbers to vote for you; rather it is about who is well positioned in the path to glory, power and personal gain.

There is nothing wrong with ambition. As the legendary Masinde Muliro once said, if you have no ambition, get the hell out of politics. But perhaps in the pursuit of your ambitions, you may want to be guided by the Holy Book. Mathew 20:20-28 narrates to us how the mother of James and John told Jesus of her wish to have her two sons sitting at each side of Jesus in heaven. Jesus' reply should inform all of you clamouring for high offices and succession. He told the mother of James and John that it was not him to decide, rather the positions she was seeking for her sons were for those who had been prepared by Cod his Father.

If you internalize the above teaching from the holy book, you will realize that the current succession talk is nothing but vanity of vanities. If you take time to listen to the current undercurrents within the Mt Kenya region, you will realize that the last thing that the people who elected you want to hear about is power and succession.

Our people want to hear solutions to the myriad issues and challenges that afflict them. They want you to fulfill the promises and pledges that you gave while campaigning last year. With all due respect, we advise you to hearken to the voices of our people or risk losing their patience permanently.

IDP'S
We like your current talk of succession and political positioning. But in the name of Cod Almighty your current talk of succession is an abomination to the hundreds of thousands of the internally displaced persons dDP's) currently languishing in various camps in this cold winter. As you are aware, a disproportionately overwhelming majority of these IDP'S are blood relatives of the Mt. Kenya communities. Their situation is so dire and grave that some of them have been reported to have resorted to prostitution for survival. The ones who have gone back to their farms are sleeping in the cold, living in pathetic sub-human conditions. Their children are not going to school, unlike your children. They have no food, they have no money, they have no shelter, they have no hope.

As of December, 2007, these people were doing just fine. The only "crime" they ever committed to deserve what they are going through was that they were presumed to have voted in line with the Mt Kenya community. Our appreciation to them is through succession talk while they languish in an abyss of despair. These people will hold you guilty forever. Their patience is running out, they want solutions today before tomorrow. They want immediate resettlement; they want immediate and fair compensation.

The IDP'S demand of you that you stand up and speak out for them so they can regain the dignity in their lives. Sorry to disappoint you, they would not care less who will be the next President of the Republic of Kenya. They want action and the jury is out.

Youth and Jobs
Other than the IDP'S, waheshimiwa, there is another group that is equally if not more sick of your succession talk. That is the forgotten youth in the Mt Kenya region. During the campaigns, you promised to deliver to them the moon on the one hand and the sun on the other. But have a look at their situation. Majority of our youth are rotting in the shopping centres across our region where they idle away their productive days In hopelessness and anger. They want jobs, not succession. They have laid their hopes for a decent living with you, Waheshimiwa.

They wonder where you get time to talk about succession when you are meant to be extremely busy planning and executing programmes that will give them jobs and other forms of economic empowerment. They want to hear you talk, they love your voices but they would rather you talk about the continued harassment and persecution of young people in the region for the crime of being jobless. The youth of Mt Kenya region are waiting for you to stand up for them and the jury is out.

National Healing
Honourable ladies and gentlemen, the recent events that followed the General Elections of 2007 have brought to the fore the need for all of us to re-dedicate ourselves to the principle of a united, unitary and indivisible nation called Kenya, in this regard, as leaders of the Mt Kenya community, you have a responsibility to lead our region in continuously building bridges with the rest of the country. This is not unique to you as Mt Kenya leaders.

The same is demanded of leaders from other regions. Our nation needs time to heal. Kenyans have been deeply hurt and scarred by the events that rocked this country since December 27", 2007. They need a break, period! The current succession talk by Mt Kenya leaders flies in the face of the healing process. Forgive us, but in the wake of the healing process, your current squabbles on succession are not helping much in the healing process. Your actions have the risk of further isolating Mt Kenya from the rest of the country. We will be seen as a people too eager to run after a fly while Rome is burning.

Uprooting of Tea and coffee
You have realized that an increasing number of our people are uprooting tea and coffee. Their patience has run out. They have given their leaders enough time to fix the problems in tea, coffee and other agricultural sectors. Since you started these meaningless fights for succession, the rate of uprooting has gone up a notch higher. Why? Our people have realized that you will not have the space any time soon to think about reforming the tea and coffee sectors. Kindly read the mood of our people and align yourselves accordingly.

Constitutional Reform
While you are busy fighting each other, others are busy preparing for the forthcoming constitutional reform. You are aware that the Mt Kenya communities, like all other regions have major stakes in the re-writing of the constitution. Various longstanding issues that have affected our community negatively can and should be addressed in the forthcoming process. Top on the agenda is the issue of a fair distribution of the constituencies.

The people of Mt Kenya region want to hear you address the skewed distribution of constituencies that have continued to place an unbearable burden on you as members of parliament thus affecting service delivery to them. They want to see you working towards a permanent settlement and solution to the outstanding questions so that the rights to life and property are made sacrosanct in the new constitution.

They want their rights to settle anywhere in the country affirmed and protected. You as their leaders would do yourselves a lot of good if you spent more time standing up for those rights than scratching each other's face in the name of succession.

Education in Crisis
Our community has historically placed a very high premium on education, in fact, education and enterprise are pillars of our community. Yet, waheshimiwa, none of you can look at us in the eye and claim that you are proud of the status of education in the Mt Kenya region. Our educational institutions, facilities and standards have continued to falter over the years. Urgent action is required to uplift them. You are better off focusing on that than in these distractive talks about succession.

Inaccessible Leaders
if you never knew, compared with the rest of the country, leaders in Mt Kenya region are perceived by their own people to be disconnected to their needs. You have an onus to bridge the gap between the leaders and the people. Our people want leaders who are close and accessible to the common man. if you were, you would realize that they want you to prioritize their problems over your succession issues.

Youthful Leadership
During the last General Elections, our people voted for a very high number of youthful members of parliament, just like the other regions did. In fact over 85% of our M.P's in the region are young. It is imperative upon these youthful M.P's to rise up to the challenge and lead our region towards not only solving the above challenges, but also towards greater heights of prosperity for the Mt Kenya region.

Sense of Priorities
In a nutshell, we request that you work towards solving the problems of our people. It is too early to confuse our people through succession talk, we would like to remind all and sundry that we have had many presidential candidates in the past and thus there is nothing magical, unique or even wrong about having presidential candidates in 2012. Since 1992, Mwai Kibaki, Mukaru Nganga, Koigi wa Wamwere, Waweru Ngethe, Wangari Maathai, Godfrey Kabeeria Mwireria, Dr Munyua waiyaki, Uhuru Kenyatta, Kenneth Matiba and Bishop Pius Muiru have all vied for the Presidency. They are all from the Mt Kenya region. Nobody interfered with their democratic right, just as no one will interfere with your democratic right to vie in 2012.

The question is: - With the foregoing issues and challenges, with the iDP's still in the camps, with our youth roaming the villages and urban centers without jobs, with our farmers uprooting tea and coffee, with the country still trying to heal from the post-election wounds, with the constitutional reforms still not started, with our education in crisis, do you people have a sense of priorities?

Kindly ponder over these matters otherwise political oblivion is approaching fast and furious.

Moses Kuria Secretary General
Timothy M. Muriuki Chairman

REAVipingo Plantations Limited ("RVP") announces that it has agreed to acquire the whole of the issued share capital of Vipingo Estate Limited ("VEL').

At the time of RVP's formation in 1995, the land owned by VEL was split into two parts: the Vipingo Estate (incorporating substantially all the areas at Vipingo under sisal) which was acquired by RVP from VEL at that time and other land which was retained by VEL.

Subsequently, VEL has divested much of the land area which it retained but certain parts remain. These include an area of approximately 330 hectares on which, by agreement with VEL, RVP currently cultivates sisal. The land retained by VEL also includes a number of plots close to the Indian Ocean. In the opinion of the directors of RVP, acquisition of these assets through VEL will provide a useful addition to RVP's Vipingo estate.

The directors contemplate that part of the area close to the ocean can be developed to provide new management housing for the estate to replace existing management housing which is held on leases which will expire within 2 years.

The consideration for the acquisition is estimated to amount to $5.3 million but will be subject to adjustment by reference to the assets of VEL at completion. The consideration will be settled as to an estimated $2.1 million in cash and as to the balance by assumption of liability for repayment of balances owed by the vendor and its associates to VEL

The net assets of VEL at completion will comprise the property assets and receivables from the vendor and its associates referred to above, together with other short term receivables and cash with a projected aggregate book value of $6.3 million.

By Order of The Board
Nairobi
1st August 2008

Whenever I think of January this year, I get the shivers. Not because it scares me, but because I cannot process the madness we went through as a country.

If Martha Karua became president, I would wish her to be a Margaret Thatcher -- with a compassionate and affectionate, fond and kind, side to her public persona.