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White elephants? Region’s big-ticket projects in limbo




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In 2013, the presidents of Rwanda, Kenya, Uganda and South-Sudan came together to fast-track the implementation of infrastructure projects on the Northern Corridor, at a time when the pace had slackened or stalled for some, due to a lack of commitment by Tanzania.

Under the Northern Corridor Integration Projects, the four leaders forged a unity of purpose in what famously came to be known as the Coalition of the Willing (CoW).

Among the targeted joint projects were oil pipelines, standard gauge railways, a refinery, a port and power projects.

The highly anticipated East African crude oil pipeline from Hoima in Uganda through Lokichar in Kenya to the proposed Lamu port on the Indian Ocean coast is a non-starter.

To date, its construction is still in limbo, almost three years after it was approved by the regional heads of state.

The pipeline, which was to be completed this year, has been delayed by the wavering of investor interest, especially after Uganda abandoned it for the proposed 1,445km long Hoima-Tanga one led by Tanzania.

But even the Hoima-Tanga pipeline construction that was expected to start late last year hit a snag, after investors who had expressed interest demanded a higher transit tariff beyond the $12.20 per barrel, which had earlier been agreed on.

This has raised serious doubts over Uganda’s target date for the commencement of production.

In 2016, Uganda’s Energy Minister Irene Muloni said construction could take about three years.

The pipeline, estimated to cost $3.55 billion, will transport Uganda’s crude from Kabaale in the western Hoima district, to Chongoleani peninsula near the Tanga Port in Tanzania for export.

Uganda and Tanzania are expected to finance 70 per cent of the pipeline’s total cost through international lenders while the remaining 30 per cent capital will be raised through equity by Total, Tullow, China National Offshore Oil Corporation (CNOOC) and joint venture partners.

It is argued that Uganda’s decision to abandon the Kenyan route of the regional crude pipeline also watered down the Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor, an acclaimed joint project for the region that would have encompassed an oil refinery in Hoima, transport corridor to South Sudan oil fields and to Ethiopia, Lokichar oil pipeline and the Lamu port.

The future of the Northern Corridor infrastructure projects now hangs in the balance.

South Sudan’s Minister for Petroleum Ezekiel Lol Gatkuoth told The EastAfrican last November that the move by Uganda to ditch the Kenyan route not only put the future of the Northern Corridor projects in limbo but also the ambitious Lapsset.

“The Lapsset corridor was supposed to benefit South Sudan and we are still committed to it. But we cannot do much about other developments in the region. Uganda’s rejection of the Kenya route in favour of the Tanzania one is a serious issue,” said Mr Gatkuoth.


The region had also planned a joint crude oil refinery in Hoima, western Uganda, but its implementation has also been marred by lack of commitment by investors.

The project has fallen behind schedule by close to five years after member countries’ lacklustre pace in acquiring ownership.

Uganda, Kenya, Tanzania, Rwanda and Burundi had been allocated a combined 40 per cent shareholding in the refinery, translating to 8 per cent stake for each, with 60 per cent of the shares reserved for private investors.

So far, only Tanzania has taken up its full 8 per cent shareholding in the refinery while Kenya has only taken up 2.5 per cent stake.

Rwanda and Burundi are yet to commit to the project. As a result, Uganda is expected to take up an additional 11.5 per cent bringing its total shareholding in the Hoima-based refinery to 19.5 per cent after the French oil giant Total SA took up 10 per cent stake.

The deadline for acquisition of shares had been set for 2014 before being extended to June 2016.

In 2016, Uganda’s Energy Minister Irene Muloni pushed the completion date of the refinery to 2020 from 2018 following delays by EAC member states to take up ownership and get another lead investor after talks with the Russian consortium Rostec Global Resources, which had won the tender to finance, build and operate the refinery collapsed in the last minute.

Last year, Ms Muloni said the refinery would now be operational by 2023 after a consortium led by the US multinational General Electric Company contracted to build the 60,000 barrel-a-day plant delayed in carrying out its front-end engineering design, or FEED.

The design initially due for completion in 2017 started last year 2018. Ms Muloni said the delay would impact the completion of the refinery.

As the region struggles to get its oil infrastructure in place, Kenya’s ambitious plan to evacuate crude by road has been hit by delays, blamed on lack of proper planning, logistical nightmare and lack of widespread consultations.

This means the country’s dream of exporting oil has yet again been deferred to June this year.

Analysts had long warned that Kenya’s hurried plans to have its oil hit the international markets under the Early Oil Pilot Scheme (EOPS) was doomed to fail but the government, Tullow Oil and its joint venture partners insisted on its implementation.

A 2016 scheme to evacuate crude by road from Lokichar in Turkana to Mombasa port, a distance of more than 900 kilometres has now proved to be a daunting task.

The failure to adhere to set timelines, considering that Kenya had set a target of February 2019 to ship out the first consignment of 450,000 barrels, has seen the EOPS join the other regional projects that are now nothing more than pipe dreams.

Tullow has admitted that initial targets to truck 2,000 barrels per day have failed, with the three firms contracted to transport the crude managing an average of 1,800 barrels a week, which translates to about 250 barrels per day.

Since the trucking of the crude commenced in June last year, only 60,000 barrels have been transported for storage in Mombasa and the company is hoping it can achieve the targeting of transporting 2,000 barrels by April.

Just like many other projects whose implementations are facing challenges, the EOPS was conceived, designed and implemented under circumstances that have largely remained opaque.

The government, Tullow and its joint venture partners Africa Oil Corp and Maersk Oil have failed to adhere to disclosure laws.



Sordid tale of the bank ‘that would bribe God’




Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –




Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

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Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

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Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

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William Ruto eyes Raila Odinga Nyanza backyard




Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

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