Category Archives: France

France & Kenya and Renewable Energy

Yesterday there was forum on renewable energy in Nairobi. It was organized by the Embassy of France and the Kenya government to show executives from French energy companies opportunities to invest in renewables and other energy projects in Kenya and Africa. Aqylon, Engie, GreenYellow, Quadran,  Sogea Satom, Total , UrbaSolar, Vegrent, and Vinci representatives were part of the group.

French companies built hydro dams in Kenya

French companies built hydro dams in Kenya

Excerpts

  • Large silent corporations include Engie which produces 3 GW in Africa and Vinci which has EUR  800  million of revenue, and 14,000 staff in Africa.
  • SUNREF from AFD/KAM provides tailored finance for green energy to Kenyan companies through Bank of Africa,  CBA,  Diamond Trust and Cooperative Bank. 11 companies have now been financed, and some that have got SUNREF green energy finance include KTDA, Meru dairy, Strathmore University, and Redland Roses.
  • Kenya has 10 independe power producers (IPP’s) producing 650 MW (28%) of its electricity – shows how vibrant it is for investors.
  • Regional electricity sharing in future: Kenya produces 2,200 MW, Ethiopia 4,284 MW (90% from hydro), Tanzania 1,583 MW (65% from thermal), and Uganda 900 MW (80% from hydro)
  • GreenYellow works with factory, malls, hotels, to finance & build (heat/cold/solar/light) systems that reduce their energy costs by 30%
  • UrbaSolar is working with Kenyatta University on a 100% self-consumption plant that will reduce electricity bills by 80% (20% is night).
  • Total is constructing a 40 MW solar plant at Isiolo with Green Millenia, while Kenya’s rural electrification authority (REA) has got funding to do a 50 MW one near Garissa.
  • KenGen which provides 80% of Kenya’s electricity, has tendered for an Olkaria 5 plant, and will build an industrial park there.
  • There’s opportunity in Kenya off-grid & mini grid electricity, but there’s no legal framework for integrating with the national grid integration & projects sometimes face land acquisition or compensation delays.
  • Solar has not picked up in Kenya, but with drop of photovoltaic prices, there’s lots of interest here now – Energy Permanent Secretary J. Njoroge told the companies..  He also said renewable energy is intermittent – it can only be used up to a certain % of Kenya’s electricity grid supply. Later there was  mention of CSP solar plants which are more complex & expensive than traditional PV ones which but do give stable solar electricity.

Orange Kenya Outlook

Ever since the East African broke the story about France Telecom asking the Kenya Government (GoK) to reimburse it for more than the amount it paid to invest in the privatization of Telkom Kenya in 2008, its been an interesting tale – (summarized well here at Ratio Magazine) – and also confusing that a company invested in the mobile business – a component of one of Kenya’s fastest-growing sectors (communications) until recently, could be struggling. Orange is also the exclusive partner apple for the i-phone in Kenya which is the world’s leading smartphone.

Market leader Safaricom is part of the problem as Orange, Zain and Yu have been unable to shake its dominance of the market whether voice, data, dealerships, money transfer.

That Orange expects more support from GoK as a shareholder is evident since they still own a majority (51%) of Telkom Kenya, compared to the 35% GoK owns in Safaricom. E.g. Orange, Zain and Yu have been lobbying hard for the lowering of the cost of a 3G license from the current $25 million which only Safaricom has paid (Kahenya wants proof that 3G was paid).

But lobbying to GoK against Safaricom is not always as easy since they are one of the country’s largest taxpayers and a vital cash cow that is a consistent source of revenue for GoK increasing expenditure. e.g In the two years prior to Orange arrival, Safaricom paid GoK direct and indirect taxes of 24.1 billion shillings ($320 million) and 18.4bn ($245 million) which is almost as much as the 25 billion that Orange paid for their investment.

Outlook: Looking at the Orange parent accounts (France Telecom) for year 2009, it appears that Orange Kenya has no value (invested EUR 244m in 2007, wrote it all off in 2008) and is now also listed as an asset available for sale.

But Orange could look on the bright side and see that the market is changing while the “rags to riches” tale of safaricom success, as told by CEO Michael Joseph may never be replicated, the market potential is there; whatever mistakes they have made in technology selection, product rollout, and marketing can be fixed. Joseph is himself expected to retire by the end of the year taking away an intangible brand impact from the company, and a compromise is likely to be reached with 3G license cost, EASSY fibre, inter-connection rates and number portability which will ease the environment for new investors Essar (Yu), Bharti Airtel (who are buying Zain Africa assets) and Orange.

Banking News

ADB: The New head of the African Development bank ADB will be elected on 22. This was after USA and France combined to scuttle Nigeria’s bid for the presidency – according to the Business Day (SA) newspaper. Donors threw their weight behind the Rwandan candidate, Donald Kaberuka. Kaberuka met the criteria on total votes polled but did not meet the regional vote percentage required, while Bisi Ogunjobi, the Nigerian candidate, likewise met the criteria on regional votes but missed that of the total votes polled. According to the East African (Kenya), most countries are determined that the president should not be from a French-speaking country.

KCB: Kenya Commercial Bank will begin offering Western Union services at all branches soon.

EIB: The European Investment Bank (EIB) has opened the first of three first regional office in Sub-Saharan Africa in Nairobi – to cover Central And East Africa.

NBK: National Bank of Kenya is carrying out a retrenchment package that will cost over 80 million shillings ($1m). It is being done in three phases: employees who are over 50 years, followed by non-performing staff. After that, it will be voluntary retirement for anyone wishing to leave the Bank.

Executive Changes: 

  • NIC Bank has a new Managing Director James Macharia.
  • Robert Barry, the CFC Group MD has resigned for personal reasons.
  • Mr Albert Ruturi, the Chief operating officer at KCB is retiring. The Bank, which is searching for a deputy CEO, has placed an advertisement in the Economist magazine, leading to the possibility that a non-Kenyan will be picked.

Finance Minister Resigns

Ministers do resign, except those in Kenya, the latest: French Finance Minister Hervé Gaymard resigned Friday after 12 weeks on the job after revelations that he and his family were renting a €14,000-a-month luxury apartment in Paris paid for by the state. In addition to the high rent, about $18,500 a month, there was an additional €2,500 a month for maintenance and three parking spaces, €32,000 to renovate the apartment and the parking area and €12,000 for real estate fees.
– He has pledged to pay back the costs incurred for renting the apartment, including the renovation costs and fees for breaking the lease.
– What was particularly unsettling for many public critics was his claim in a magazine interview that if he had been the son of rich bourgeois and not of a shoe repairman, there never would have been a problem because he would own his own apartment
– Gaymard, 44, and his wife, Clara, 45, who is France’s ambassador-at-large to attract foreign investment, broke no laws in choosing a 600-square-meter duplex apartment close to the Élyseé Palace that would accommodate them and their eight children. According to French tradition, the government provides free housing for ministers in their ministries or other state-owned buildings or in rental apartments.
– It was Gaymard’s loyalty to Chirac that catapulted him from Agriculture Minister to Finance Minister after the presidential hopeful Nicolas Sarkozy resigned from the post in November.
– With his smooth, non-confrontational approach, Gaymard had been confident that he would survive the storm. He told the newspaper Le Figaro in an interview published Thursday that he enjoyed the confidence of Chirac and his government
– Earlier, he had said that as someone who worked “120 hours a week,” he had not had the time to check on the amount of the rent for the apartment.