Estonia Comes to Nairobi, Kenya's Fuel Reserves?

Here's what you need to know to start your week.

Author

Kenyan Wall Street
December 04, 2023

The Weekly Brief, by The Kenyan Wall Street, is a newsletter that goes out every Monday morning at 9 am (EAT).

The overall inflation rate for Nov 2023 as measured by the Consumer Price Index (CPI) was 6.8 per cent, down from 6.9 per cent recorded in October.

The Housing, Water, Electricity, Gas and Other Fuels’ Index increased by 0.2 per cent between October 2023 and November 2023, mainly on account of a 1.1 per cent rise in the prices of both gas and cement.

In the 30 years since the Rio Summit, and the launch of the United Nations Framework Convention on Climate Change (UNFCCC), the Conference of the Parties to the Convention (COP) has convened member countries every year to determine ambition and responsibilities, and identify and assess climate measures.

In this week’s issue: Estonia comes to Nairobi, and why Kenya has no strategic fuel reserves.

Estonia is Coming to Nairobi

Latitude59, the flagship tech and startup event, is set to host its first-ever edition in Kenya, on December 6, 2023.

Organized by Estonia, the world’s first digital nation and global unicorn factory, Latitude59 is renowned for its flagship startup conference, and the Kenya Edition promises to go beyond the conventional conference experience, offering a comprehensive program designed to connect innovators, entrepreneurs, and key players from around the world.

  • Estonia is a European country on the edge of the Baltic Sea.

  • It is a digital factory with more unicorns than the African continent, with fewer people than Kakamega County.

  • This event will showcase the most innovative startups from across the continent following the selection of the TOP 9 startups set to pitch at the Latitude59 Pitch Competition Finals.

Latitude59 initiated the L59 Pitch Competition for its 2023 Kenya Edition in collaboration with Startup Wise Guys, a leading European accelerator. Over 100 applications were received from diverse corners of Africa and only 20% of the applicants earned the opportunity to pitch at the prefinals, and now the stage is set for the TOP 9 finalists.mMyShule, Skizaa, Kiotapay and ZofiCash, and others.

  • The Latitude59 Pitch Competition offers these startups an invaluable chance to pitch in front of a live audience of 500 people, including an international jury of startup experts and fund managers. Additionally, the prize pool includes:

  • A fast-tracked spot to the semi-finals of the Latitude59 2024 Pitch Competition in Tallinn, Estonia, with a trip fully paid by Latitude59.

  • $20K in Infobip service credits and a spot in Startup Wise Guys’ next Africa program, with an opportunity to be fast-tracked to an investment ticket of €100K.

Headlines to Start Your Week

News Snapshot:

Equity buys COGEBANK

Equity Group Holdings Plc (EGH), has completed its acquisition of Rwanda’s bank, Compagnie Générale de Banque (Cogebanque) Plc.

  • EGH now holds 198,250 shares representing 99.1250% of the issued share capital of COGEBANQUE, officially making the Rwandan lender its newest subsidiary.

“The consolidation…will create a stronger and more resilient banking institution better equipped to serve the needs of the people of Rwanda and will contribute to Rwanda’s economic growth and development,” said Rwandan Minister of Finance and Economic Planning Dr. Uzziel Ndagijimana.

In Listed Companies Last Week

Kenya has no Strategic Fuel Reserves

While Kenya has no strategic fuel reserves, petroleum is its single largest import item and is likely to remain so for decades to come.

  • Conservative estimates indicate that Kenya spends upwards of KSh 90 billion or more a year to import crude oil, figures that are on a steep rise with each depreciation of the Kenya Shilling against the greenback.

  • At the moment, Enoc, Adnoc, and Aramco are the three international oil companies under the government-to-government arrangement that ship in crude oil to Kenya.

  • These companies have Gulf Energy Ltd, Galana Energies Ltd, and Oryx Energies Kenya Ltd as their agents to import petroleum products into Kenya on their behalf.

Price volatility has been a challenge for fuel consumers and Kenya’s economic stability.  Analysts attribute the high prices to high taxation levels and an apparent collapse of the country’s price stabilization mechanism or fuel subsidies.

The government notes that Kenya is well endowed with cheaper renewable power resources. The government does mention plans to set up a legal framework to ring-fence the fuel stabilization fund.

  • Countries that have gone the fuel reserves route are led by the USA which has an emergency stockpile of petroleum maintained by the United States Department of Energy (DOE).

  • It is the largest publicly known emergency supply in the world; its underground tanks in Louisiana and Texas have a capacity for 714 million barrels (113,500,000 m3).

  • Attempts by Kenya to have its own stockpile of fuel reserves have been on the backburners for more than 15 years since 2008 when the idea was first mooted.

In the latest move, Kenya planned to allocate the task of maintaining strategic fuel reserves to the state-owned National Oil Corporation of Kenya(NOCK).

According to the legal notice of The Petroleum Act, 2019 (No. 2 of 2019), there is to be established a percentage of the import requirements to be imported by the National Oil Corporation of Kenya.

The purpose of this strategic reserve is to ensure security of supply in times of uncertainties; price stabilization in an unregulated pricing regime; and strategic stock requirements as may be specified by the Cabinet Secretary are met.

  • These draft rules also stipulate that Kenya Pipeline Company Limited will allocate up to a maximum of 30% of its total storage capacity for the purpose of maintaining the strategic fuel reserves that will include petrol, kerosene, gasoil, premium motor spirit, and Liquefied Petroleum Gas.

  • The strategic petroleum stockpiles are designed to cushion the country from supply disruptions caused by domestic or global factors.

  • According to the draft, strategic stocks shall be shared on a pro-rata basis among Oil marketing companies, based on their immediate throughput data as shared by Kenya Pipeline Company less transit volume.

The draft rules envisage the establishment of a Consolidated Petroleum Fund, created by the Petroleum Act 2019, to finance the acquisition of products that will be stored as strategic stocks.

This fund is to get financial resources from the National Treasury, through budgetary allocations as well as contributions from Oil Marketing firms.

The next fuel price review will be on Dec 14th, with any price change beginning the next day, a Friday.

Upcoming Events

    • COP28 Networking Reception: Dubai, Dec 5.

    • 2nd National Conference on Career Guidance & Development 2023: Nairobi, Dec 6.

    • Latitude59 Kenya Edition: Nairobi, Dec 6.

    • SuperReturn Africa: Cape Town, Dec 4-6.

    • International Conference on Business Incubation and Innovation: Nairobi, Dec 18.

Interview of the Week: Joe Mucheru previously served as the CS for ICT. Before that, he was a regional lead and country manager for Google in sub-Saharan Africa.

What Else We Are Reading

Kenya Signs Deals Worth $4.48 Billion to Develop Green Projects. Bloomberg [Paywall]

Kenya launches new atlas showing oil and gas locations. The Star. [Link]

Death toll from floods reaches 136 as waters wipe towns off the map. Africa News. [Link] 

This is the second last issue of the newsletter for the year. The last issue will be published on 11th Dec.

Have a great week!

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