State to investigate oil marketing companies
18 April 2022
Good Morning. In this month’s fuel price review, the price of a liter of petrol has increased to Ksh 144.62 from Ksh 134.72.
Diesel will cost Ksh 125.50 from Ksh 115.60.
Kerosene will retail at an increased price of Ksh 113.55 per liter.
State to punish oil marketing companies found guilty of hoarding petroleum
Last week, The Petroleum ministry stated that it had asked 10 oil marketing companies to show cause for why their licenses should not be revoked for reportedly hoarding fuel supplies in the country.
The ministry issued demand letters to 10 oil companies and its’ chief executives were summoned to record statements with the Directorate of Criminal Investigations.The announcement came briefly after the state revoked the work permit of Rubis chief executive for East Africa on account of causing economic sabotage by hoarding fuel.
Rubis denied claims that the CEO was deported and instead stated that their CEO had traveled to France (its Headquarters) to brief executives on the ongoing situation in Kenya. The company also denied the accusations that it was hoarding fuel.
FINANCE
1. The Nairobi International Finance Centre is set to officially launch in June
The Nairobi International Financial Centre (NIFC) expects to formally launch in June 2022. This follows the setting up of its board and the publication of regulations to back its operations.
In July 2021, NIFC received a letter of intent to join from British underwriter Prudential Plc which intends to set up its Africa headquarters in Nairobi.
2. IFRS (International Financial Reporting Standards) 17 and its effect on insurance companies in Kenya
IFRS 17, which comes into effect in January 2023, will raise capital requirements for insurers in Kenya.
Insurers will have to double their capital and shift all non-quoted investments into a holding company.
Background: IFRS 17 was issued by the International Accounting Standards Board (IASB) with the objective of creating a single global insurance accounting standard that would increase the transparency of insurers’ financial positions and performance and make their financial statements more comparable with both other insurers and other industries
MARKETS
Kenyans can now invest and trade in Eurobonds issued by the government
The Standard Investment Bank (SIB) has established a euro bond trading desk that will enable Kenyans to invest and trade in Eurobonds issued by the government.
The Eurobond trading desk will also allow clients to trade in sovereign bonds issued by other African countries such as Ghana and Angola.
BANKING
The interest rate charged on loans rises to its highest level
The average interest rate charged on loans by Kenya’s commercial banks has risen to its highest level in two years. Data by the Central Bank of Kenya (CBK) shows that the lending rate was at 12.17% in February 2022 (the highest since February 2020)
The rise is attributed to increased demand for credit as the economy recovers from Covid-19 disruptions.
Looking forward: Several banks are seeking regulatory approval from the Central Bank to raise rates on riskier borrowers. This would translate into expensive loans for small traders and workers in the informal sector.
INTERNATIONAL
Kenya declined Ukraine’s request to address Kenyan Parliament
Although Kenya has used its non-permanent seat on the United Nations Security Council to condemn the Russian invasion, it is yet to grant Ukraine’s wish of addressing the Kenyan Parliament.
Kenya declined the request from Ukraine as this would lead to Kenya being dragged into a conflict that has the potential to hurt its bilateral ties with both Kyiv and Moscow.
Kenya has been cautious, avoiding departing from the African Union’s position, which condemns the invasion but opposes the massive economic sanctions imposed on Russia.DROUGHT
3.5 million Kenyans are in need of food assistance
A report released by the Intergovernmental Authority on Development (IGAD) revealed that approximately 3.5 million Kenyans are in desperate need of food assistance due to drought.
According to the report, Rainfall levels in northern Kenya’s arid and semi-arid areas were 26-50% lower than anticipated during last year’s October to December rainy season.
Kenya also suffered a 70% drop in crop production this season.
According to the UN’s Office for the Coordination of Humanitarian Affairs (OCHA), more than 90% of open water sources in Kenya’s arid and semi-arid lands have dried up and the remaining ones are projected to last only between one and two months.
Note: In September 2021 the government declared the persistent drought a national disaster and released two billion shillings under the National Drought Emergency Fund in response to the situation. however, the flow of the funds has been slow to reach the areas it is needed most.INDUSTRY
Tullow Oil is searching for a strategic investor for the Kenya project
Tullow oil risks closure of its operations at the Turkana Oil Project if it does not find a strategic investor. The final investment decision would depend on getting a strategic partner.
A strategic partner would enable Tullow Oil cushion its risks for the multi-billion project that includes setting up a crude pipeline and processing facilities for the oilfields.
WHAT YOU MIGHT HAVE MISSED THIS WEEK
FIFA to launch streaming platform FIFA+
FIFA announced the launch of FIFA+, a world-class digital platform created to connect football fans across the globe more deeply with the game. FIFA announced that the service will be free.
A bi-lateral deal between Kenya and Tanzania
Kenya and Tanzania discussed a bilateral deal cutting across the energy and aviation sectors.
The deal grants Jambojet permission to fly to Tanzanian destinations as Tanzania's Taifa Gas gets permission to set up a production facility at Kenya's Export Processing Zone.
Uber suspends operation in Tanzania
Uber announced that it has suspended its operation in Tanzania after six years of operations in the country. The company explained that the current regulations in the transportation sector had created an unfriendly environment for the business.
High court Barrs NSSF from recruiting general managers
The High Court stopped the National Social Security Fund (NSSF) from recruiting general managers until the board of trustees’ submits its human resource guidelines to the Public Service Commission for approval.
Last year, The NSSF board advertised for several positions of general managers following a review of its organizational structure. However, the Consumers Federation of Kenya challenged the advertisement stating that it was made using a new human resource manual, which was prepared without compliance with the Constitution, Public service Act, NSSF Act, and public participation.
Sim card registration deadline
The Communications Authority of Kenya extended the deadline for SIM card registration by 6 months to October 15, 2022.
“Upon lapse of the new deadline, network operators and subscribers who will not have complied with the new directive, will be subjected to fines” - Communications Authority of Kenya