Trial by Fire: KCB Auctions Nakumatt CEO Atul Shah’s Property Within Hours After Winning Court Case

Trial by Fire: KCB Auctions Nakumatt CEO Atul Shah’s Property Within Hours After Winning Court Case

Atul Shah may have walked out of the Nakumatt fiasco wealthier than when he started some 40 years ago but has left behind sorrow among the people he dealt with.

High Court judge Alfred Mabeya on Tuesday gave a nod to Kenya Commercial Bank (KCB) to auction property owned by fallen Nakumatt CEO Atul Shah over a Ksh2 billion debt.

In a speedy move aimed at evading a tussle between lenders, KCB sold the property to Furniture Palace International Ltd for Ksh1.04 billion, taking a loss of about Ksh1 billion. The sale was supposed to be closed on Wednesday.

Making the ruling on Tuesday, the Judge wondered how several banks were duped into offering loans amounting to over Ksh4 billion for a property that was not worth the amount as security.

“If the court was in doubt, which is not the case here, the balance of convenience tilts in favor of allowing the defendant (KCB) to recover its outlay,” said Justice Mabeya.

“The court was invited to consider that the sale by the defendant would injure and prejudice the rights of the other lenders who have the suit property as their only security. While this court sympathizes with the said lenders, it defeats logic how prudent bankers would extend facilities amounting to over Ksh4 billion on single security whose value is less than Ksh2 billion.”

Standard Chartered and DTB Banks, who were eyeing the same property, are owed a combined debt of Ksh4.5 billion.

Nakumatt owed DTB Bank Sh3.6 billion, Stanchart Sh900 million, KCB Sh1.9 billion, Bank of Africa Sh328 million, UBA Sh126 million, and GT Bank Sh104 million.

The High Court in August had allowed Bank of Africa to auction Shah’s property, but the former CEO moved to the Court of Appeal to block the auction.

He later withdrew the case, opening a battlefield for banks over the property.

By the time Nakumatt closed completely in January 2020, it owed creditors over Ksh30 billion including Ksh18 billion to suppliers, Ksh4 billion to commercial paper holders, and the rest to banks.

Nakumatt’s troubles started when the business had peaked in 2017 at a time sales topped Sh52 billion. It also coincided with the exit of Harun Mwau, who sold his 7.7 percent stake to the Shah family at an undisclosed price. Funds spent were drawn from the business, hence the immediate impact on cash flows.

Nakumatt could not survive the blow as it immediately started struggling to pay suppliers, to mark the start of its death occasioned by stock-outs.

The family-owned supermarket until two years ago boasted of 62 branches spread across East African capitals but does not have assets today.
From a son of a once bankrupt father, he built an empire that grabbed global attention, including from the world’s biggest retailer Walmart, but ended just about where it all started.

Kenya’s exports rise to $4.4 billion: government official

Kenya’s exports rise to $4.4 billion: government official

Kenya’s total exports increased to a record 480 billion shillings (4.4 billion U.S. dollars) for the period between January and September, up from 4.1 billion U.S. dollars over the same period in 2019, a senior government official said on Friday.

Betty Maina, cabinet secretary, Ministry of Industrialization, Trade and Enterprise Development, told a trade forum in Nairobi that total imports shrank by 9.6 percent to register 11 billion dollars between January to September, compared to a similar period in 2019.

“This means that the balance of trade deficit improved by 1.5 billion dollars to stand at 6.5 billion dollars between January to September down from 8 billion dollars over the same period in 2019,” Maina said during an event to mark the Africa industrialization day.

Maina noted that the country is planning to negotiate preferential trade agreements with more countries so as to drive the export agenda.

She noted that the current phenomenon of collapsed global value chains means that Kenya must rethink nurturing strategic industries to enable them to grow and become regionally and globally competitive.

“It calls for all Kenyans to develop a taste and liking of locally made goods and services in support of domestic industry, which is necessary to occasion increased employment opportunities, improve incomes, reduce poverty and enhance livelihoods,” she revealed.

According to Maina, the Buy Kenya Build Kenya strategy aims to increase competitiveness and enhance the consumption of locally produced goods and services, and to reduce over-reliance on imports.

Kenyan business mogul James Mwangi to establish financial towers in Rwanda

Kenyan business mogul James Mwangi to establish financial towers in Rwanda

Rwanda’s plans to fully develop the Kigali International Financial Centre (KIFC) could be edging closer to realization following a development which will see Kenyan businessman James Mwangi set up financial towers in Rwanda.

The project, Kigali Financial Towers, was approved by the cabinet last week and will be developed by Equity Holding (EH) Venture Capital, an investment arm of Equity Group.

The Group is a brainchild of Mwangi, whose banking unit already has operations in Rwanda and across Kenya, Uganda, Tanzania, South Sudan, and the Democratic Republic of the Congo.

Clare Akamanzi, the Chief Executive of the Rwanda Development Board (RDB), told The New Times that the Kigali Financial Towers will be a real estate project that will be located in town, Nyarugenge District.

“They will build one of the buildings for the Kigali International Financial Centre (KIFC), and the idea is for it to be a state-of-the-art real estate project with a hotel that can accommodate people working at the Centre,” she said.

Akamanzi added that such kind of investments in real estate is necessary for attracting global financial brands like HSBC – British multinational investment bank – or Citibank.

“Again, if Rwanda becomes a financial center, staff will travel a lot so you always need a hotel nearby where those people can stay,” she noted.

The Government has been building a foundation upon which the country can become a regional financial center, including signing partnership agreements with other financial centers in the world.

The Kigali Finance Limited was set up to spearhead that agenda and tens of laws have been revised to build a conducive environment for big banks, wealth management firms, insurance companies, and other multinational businesses to set up base in Rwanda.

The Kigali Financial Towers is one of the latest additions to that development.

Akamanzi said the cabinet had to approve such a private project because they believe it is a “strategic project that is going to support the growth and vision of the International Financial Centre.”

Following the cabinet approval, the government will now sign an agreement that paves away for the development of the project, which should be completed within three years from the time of signing.

The real estate project will be built at the former Ministry of Foreign Affairs and International Cooperation land, just next to Ecobank Headquarters in the City Centre.

EH Venture Capital official based in Kenya told The New Times that the project was still at an early stage with no more details regarding the size of the commercial development and level of investment to reveal at the moment.

However, he said, “Definitely we’ll be done by the [project] design early next year.”

The concept of financial towers is not new. In the United Arab Emirates, Emirates Financial Towers is a 27 story twin-tower commercial development located in the Dubai International Financial Centre, Dubai’s central financial district.

Kenya invites tenders for natural gas feasibility studies

Kenya invites tenders for natural gas feasibility studies

The government of Kenya (GoK) intends to create a domestic natural gas market for power generation and industrial use.

The deadline for receipt of expressions of interest is Monday, 30 November 2020 at 10:00 hours, EAT.

The gas will be imported as government progresses with the development of the domestic gas resources.

The introduction of gas for power generation is aimed at further diversification of the country’s energy mix, increased security of supply, reduction of cost of electricity, and reduction of greenhouse gas emissions in line with the 2015 Paris Global Climate Change Agreement that Kenya is a signatory.

The Kenya Electricity Generating Company PLC (KenGen) invites expressions of interest from eligible consultancy firms to conduct a feasibility study for the following:

• Development and operation of infrastructure for importation, storage, and regasification of liquefied natural gas (LNG) for power generation in Kenya;
• Conversion of the existing Heavy Fuel Oil (HFO) to operate on natural gas;
• Development of a new natural gas power plant;
• Operations and Maintenance (O&M) of the natural Gas infrastructure for a period of 20 years.

Scope of work

The scope of the consultancy for the project is comprised of but not be limited to the following:

• Project feasibility assessment
• Site selection and site investigations
• Gas sourcing, pricing, and importation logistics
• Technical and commercial options analysis
• Market Study to estimate potential gas requirements and uses
• Project due diligence
• Economic and Social benefit analysis (ECSBA)
• Financial viability and affordability assessment
• Value for money assessment
• Legal due diligence
• Site due diligence
• Public sector comparator assessment that is, carry out an estimate of the total costs to the government of achieving the targeted outputs if the project is undertaken through the normal project development as opposed to a PPP Process
• Environmental and disaster risk assessment
• Environmental and social impact assessment
• Procurement options, and if PPP option is recommended PPP structure analysis
• Options development, evaluation, and selection
• Risk allocation framework and preparation of heads of terms for project contracts
• Project cost estimate, financial analysis, and determination of key financial parameters – NPV, FIRR, EIRR, LCOE, financial models and market sounding
• Summary of recommendations, Implementation plan, and feasibility study report
• Determine viability of development of a proposed new plant running on natural gas, should it be required
• Grid interconnection study for new natural gas-fired power plants
• Preparation of concept design and bidding documents for a competitive procurement process, if the project is deemed feasible
• If the project is deemed to be appropriate for procurement as a PPP option, preparation of the bidding documents including RFQ, RfP, and all the associated agreements.

The interested firms may submit requests for clarifications on this pre-qualification up to 10 days before the pre-qualification submission date.

Tullow targets Kenya FID in 2022, first oil 2024

Tullow targets Kenya FID in 2022, first oil 2024

London-listed independent Tullow Oil aims to make a final investment decision (FID) on its South Lokichar oil project in Kenya in 2022 and to start production in 2024.

The firm outlined the new timeline in an implementation programme presented to the government two weeks ago, according to commissioner of petroleum at the energy ministry Martin Heya. “The timelines bring the oil development project back on track and give confidence to the service providers,” Heya told Argus.

Tullow and its partners in the project, Total and Canada’s Africa Oil, had initially planned to reach FID in 2019 and first oil in 2021-22. But the decision was pushed back, first because the government took longer than expected to finalize land and water rights and then because the project partners declared force majeure in response to tax changes and COVID-19 restrictions.

The force majeure notices were withdrawn in August “following productive discussions with the government, an improvement in the COVID-19 situation and assurances from government that the tax incentives granted to the phased project will continue to apply”, Tullow said.

The project’s “foundation stage” will involve developing the Amosing, Ngamia and Twiga fields in the South Lokichar basin using a 60,000-80,000 b/d central processing facility and an export pipeline to the port of Lamu. Further development could see output plateau at over 100,000 b/d.

A pilot scheme to test the market’s appetite for Kenyan crude — which involved trucking oil from South Lokichar by road to the Indian Ocean port of Mombasa — ended in June this year.

Tullow is operator of the project with a 50pc stake, while Total and Africa Oil hold 25pc each. Tullow plans to sell part of its interest but suspended the farm-down process earlier this year to allow for a comprehensive review of the development concept.

SGR Has Boosted Direct Tea Sales to Sh600mn-KTDA

SGR Has Boosted Direct Tea Sales to Sh600mn-KTDA

A number of KTDA tea buyers and packers using the direct sales channel have embraced the usage of the Standard Gauge Railway (SGR) as it enhances logistical efficiencies and savings from the use of the railway to transport tea.

Nine tea factories managed by the Kenya Tea Development Agency (KTDA) have transported tea for export worth more than Ksh600 million using the Standard Gauge Railway (SGR) since May 2019.

The factories, Mungania, Ngere, Momul, Gacharage, Kapkoros, Makomboki, Motigo, Imenti and Kionyo, have used the SGR to transport over two million kilograms of tea to the market in a process known as ex-factory containerization.

Unlike the process where tea is taken to the auction in Mombasa, through Direct Sales (DS), tea is processed, stuffed into containers for export at source (factory) and transported to the port of Mombasa without going to the warehouse, in a process referred to as ‘ex-factory containerization’.

From the factories, the containers are ferried by road to the Nairobi Inland Container Depot (ICD) in Embakasi, where they are railed to the port using the Standard Gauge Railway (SGR) for export.

This process has led to enhanced efficiencies in the transportation of ready tea to the market, with factories receiving payments much earlier for teas transported through this mode, compared to when the tea is transported by road to Mombasa and sold normally after storage.

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KTDA Management Services Managing Director, Alfred Njagi says ex-factory containerization continues to be an increasingly preferred option for big packers that have direct sales arrangements with factories.

“Over and above being a more efficient method of transporting tea by cutting down on delays occasioned by road transport and warehousing, it has added advantages in that tea factories do not incur auction expenses such as warehouse storage and brokerage costs,” said Mr Njagi.

“It presents an opportunity for factories to leverage the SGR framework to reduce costs; while getting payments processed faster for their sales. For the customers, this process ensures the quality of the product is maintained due to the shorter time it takes to reach them and also guarantees product safety due to lower multi handling of the tea,” he added.

There are prospects for increased engagement through the process, said Njagi, which includes the construction of KTDA Warehouses next to Nairobi ICD; the re-negotiation of transportation fees on railed goods to Mombasa and, with the Lamu Port development, offer greater access to Sudan and Ethiopian tea markets.

The extension of the SGR line to Naivasha will make it more feasible for tea factories in the Rift Valley and Western Kenya to explore this process.

Currently, the containerization project is being undertaken jointly between the nine factories and Taylors of Harrogate, a leading packer based in Yorkshire, UK, with whom the factories have a direct sales arrangement.

So far, 92 units of 40ft containers have been successfully containerized at the factory and transported by SGR to the port for export.