Category Archives: Japan

Ghosn Press Conference

Former Nissan and Renault CEO, Carlos Ghosn staged an escape from home-arrest in Japan and flew to Lebanon on December 31, where he re-emerged this week and gave a press conference to justify his decision to flee. 

In the session, broadcast live from Lebanon, he spoke of the decline in Nissan’s performance that started after he left as CEO to focus on bringing Mitsubishi into the Alliance. He had been CEO for 17 years and left Nissan in 2016 with $20 billion cash, profitable, growing, respected, having taken it from nowhere in 1999 to a top (no 60) brand in the world. But performance dived after he left, in 2017 and 2018. 

He traced his troubles to a shareholder vote in France to give Nissan which owned 15% of Renault voting powers there, similar to what Renault had at Nissan in Japan with its 15%. But the vote did not attain the threshold required and the Japan government was upset and blamed him for that – and saw removing him as the only way that Nissan would get autonomy.  

He was surprised (like Pearl Harbor) when he was arrested at an airport terminal in Japan in November 2018 and told he was being charged with understating his compensation – an amount which was not fixed, approved or paid. He wanted to call Nissan to get a lawyer and (at the time) he did not know it was stage-managed. They were trumped-up charges which, while Nissan pled guilty to in Japan and paid a fine to its government, in Tennessee (USA) they had denied the same charges.

The job of the CEO is to create value, and that of the board is to protect shareholders – but, he said, today there is no alliance – I worry as a shareholder we lost 35% of value while the entire auto industry is up 12%. Today the Nissan-Renault alliance, which was the number one auto group in the world in 2017, does not work – They wanted to turn the Ghosn page and they have – growth has disappeared, profits are down, there is no strategic direction and innovation. 

What they have today is a masquerade of an alliance that is going nowhere – and they missed out on bringing Fiat Chrysler into the Alliance which he had been negotiating – and who instead chose to join the PSA (the Peugeot, Citroën) group.

The presumption of guilt prevailed and he was pressured to confess in a country where the conviction rate is 99%. He spent 130 days in isolation, underwent endless interrogations, spoke to his wife twice in nine months (in the presence of a lawyer) – and when I left Japan, I did not have a court date for the first charge – and my lawyers said it would be five years before I got a judgment – which he led him to conclude that he would die in Japan if he did not get out.  

 Another theme of his defence was that he was not greedy. He had served the company for a long time and in 2009, amid the US auto crisis, he was asked to become the CEO of General Motors and engineer a similar turnaround there. He now says, he made a mistake and should have accepted that offer. 

He was determined to fight back against a smear campaign that was part of a €200 million investigation. I was a hostage in a country I had served for 17 years, I revived a company – I was a case study and role model in Japan with 20 books written about me, then instantly I became a cold greedy dictator.

Kengen the Geothermal Powerhouse

Kenya is the only African country that has successfully tapped the green energy potential of geothermal power and is ranked number eight in the world. Kenya’s 676MW geothermal output trails that of the USA (3,567MW) Philippines, Indonesia, New Zealand, Italy, Mexico, Turkey, and ahead of Iceland, and Japan.

The bulk of this geothermal power comes from the Kenya Electricity Generating Company (Kengen) which supplies 1.6GW (80%) of the country’s 2.3GW electricity output. Of that 533MW is from geothermal energy, primarily from the Olkaria area near Naivasha, where the first wells were dug in 1950 and their deployment and production accelerated after 2007.

Kengen has 294 drilled walls with an 80% success rate, and part of that leap has been due to a Kengen-pioneered “wellhead technology”, which was done in partnership with Green Energy, an Icelandic company. Wellhead technology allows Kengen to tap steam energy within a year or two of sinking a well and recoup their investments faster (it usually costs $6 million to dig a well). In all, Kengen generates 75MW from 7 wellhead stations at Olkaria and one at Eburu.

Kengen’s Olkaria IV geothermal power plant.

In terms of electricity generation, Kengen plans to have supply stay ahead of demand especially considering the long setup time for energy plants (about seven years). With funds raised from shareholders and investors in 2016, they plan to add 1,000 MW to reach 1,745MW by the year 2025.

Kenya has an estimated 10,000 MW of geothermal power potential, and geothermal steam allows high energy demand manufacturing such as steel, cement and glass processing take place. These are currently hampered by the high costs of electricity, but the separation processes of geothermal gases means that such companies can tap steam to use at their factories nearby and this is the strategy behind a planned Kengen industrial park at Olkaria, Naivasha. Already Oserian Flowers buys steam and pipes it to heat their greenhouses in the nearby area.

As at  June 2017, Kengen had a diversified mix of installed energy sources comprising Hydro 818 MW (including Masinga 40 MW , Kamburu 94.2MW, Gitaru 225MW, Kindaruma 72MW, Kiambere 168MW, Turkwel 106MW,  Sondu 60MW,  Sangoro 21.2MW, Tana 20MW), Geothermal 534 MW (Olkaria I 45 MW, Olkaria II 105MW, Olkaria IV 149.8MW, Olkaria I AU 150.5MW), Thermal 253.5 MW (Kipevu I 73.5MW, Kipevu III 120MW, gas turbines 60MW) and wind power 25.5MW (three phases at Ngong Hills).

Kenya has a liberated energy production market, and other private sector players in the geothermal sector who are seeking support under a private-public partnership program include Sosian Power, Quantum Power, and Akiira, as wells as Africa Geothermal and Orpower who are close by Kengen’s fields at Olkaria.

Lessons for Kenya from a Japan Postal IPO

The Kenya government just announced a $600 million 2 year syndicated loan that will have  Citi, Standard Bank and Standard Chartered Bank as bookrunners and lead arrangers.

But as there’s concern of the ballooning government debt levels, is it time to turn to other sources of funding? Some have suggested the government sell off shares in companies it has such as Safaricom.

An example comes from Japan where their government is about to have what’s expected to be the largest IPO of 2015. According to this WSJ article;

  • In addition to running 24,000 post office branches, parent company Japan Post Holdings operates Japan Post Insurance, the country’s largest insurer–and Japan Post Bank–one of the world’s biggest banks by deposits, with $1.67 trillion.
  • The Japanese government is raising nearly $12 billion from the sale of 11% of three entities – its postal, banking and insurance units.
  • Most of the money raised from the sales will be used to help finance recovery efforts after the 2011 earthquake and tsunami.
  • 80% of the shares in Japan Post Holdings will go to domestic investors, while the remaining 20% are earmarked for international investors.

Missing Links

There are about 20 roads envisioned for Nairobi, known as Nairobi missing links that had been planned as far back as independence and in subsequent development plans for the City. These were designed to open up neighborhoods to development and ease transportations problems – but were never built.

These plans have remained on city maps and while land developers have generally avoided constructing on these set-aside areas, there has probably been encroachment on in the more densely populated areas, as indicated by the recent failure of fire-fighting efforts. In some cases the city council has licensed businesses to operate there but only as temporary occupants.

The Japanese International Cooperation Agency (JICA) is undertaking a study on the development of missing links “3 6 & 7” which are located on the western side of Nairobi to be an experiment for the rest of the City’s roads – and they will the projects for financing by the Government of Japan.

If approved, construction of the following roads (with bridges, pedestrian & cycle lanes) should begin in 2007:

  • a short road from the Westlands roundabout to Riverside drive
  • a road from Kileleshwa police station/Kasuku center to Methodist university
  • a road from Yaya center to Lavington area.

More Aid to Kenya

From Norway (a GJLOS Project)
Through the World Bank, Norway is funding a pilot project for the recording of court proceedings. Firms with extensive experience are invited to supply and install digital voice processing systems in some courts by applying electronically from by 27th May 2005.

From EU for Kenyan Roads
European Union support to Kenya roads i.e the Northern Corridor Rehabilitation Programme include:
– Sultan Hamud to Mtito Andei (131 km) at a cost of Kshs. 4.6 billion began in April 2003, and 72km are complete. – the rest should be done by January 2006
– Mai Mahiu – Naivasha – Lanet 95 km road section at a cost of Kshs 4.6 billion – to commence in May 2005 and end in September 2007 urgently needs to be done
– 150km of rural roads in Eastern province at a cost of Kshs. 300 million (complete)
– EUR 35 million to rehabilitate Westlands– Limuru and Timoboroa-Eldoret-Malaba highways urgently needs to be done
– Rural roads in tea & coffee producing areas of Central Kenya

From Japan
The Government of Japan has provided a grant of 1 billion yen (¥) (Kshs 720 million) in an import support program to finance import of raw materials and finished goods. Goods purchased don’t have to be of Japanese origin, but the funds may not be used for project funding. The minimum loan amount is ¥ 14.4m (Kshs 10.4 million), and the maximum is ¥108m (Kshs 77.8 million). Other terms are: payment in Kshs, 10% deposit to treasury on approval of application, balance (90%) payable within one year from date of shipment of goods, secured by bank guarantee. Apply at