THE STAR Monday, September 19, 2011 business · Mututho accused the farmers of poorly paying their...
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BY GEORGE MURAGE THE parliamentary com- mittee on agriculture chairman, John Mututho has said twenty percent of ower farmers in Naiva- sha engage in unfair trade practices. Mututho accused the farmers of poorly paying their workers and polluting Lake Naivasha. He said farmers must change their practices and improved workers salaries or close shop. “Eighty percent of the ower farmers are doing a great job but the rest are to blame for tainting the im- age of the rosy sector,” Mututho who has pre- sented a bill in parliament seeking to raise salaries of workers in the agriculture sector to Sh10,000 prom- ised to soldier on with the move. The Naivasha MP was addressing journalists at the end of the two day Naiva- sha horticulture fair. Kenya Flower Council Chief Executive Ofcer Jane Ngige said unreliable power supply, increased fuel costs and high labour costs had adversely affected the ower sector. BY JAMES MBUGUA POWER bills are set to rise dramatically after monopo- ly power distributor Kenya Power secured authoriza- tion to increase its fuel cost and foreign exchange ad- justments. In a gazette notice issued last week, Kenya Power said it would henceforth charge a massive Sh8.21 extra for each Kilowatt Hour (KWh) consumed with the corre- sponding element of foreign exchange adjustment rising by Sh1.48 per KWh. The move is likely to hit consumers hard with ofcial government data showing ination at 16.67 per cent for the month of August. A rise in electricity bills will contribute to the Fuel and Power Index, an impor- tant component of the con- sumer prices basket that the Bureau of Statistics uses to calculate the rise in prices. Manufacturers who see their power bills go up will also seek to pass on the extra costs to consumers further worsening the situ- ation. “Notice is given that all prices of electrical energy will be liable to a fuel cost charge of plus 8.21 cents per Kwh for all meter read- ings taken in September 2011,” Kenya Power said in the gazette notice. The two components are part of the surcharges that the power distributor charges to consumers in ad- dition to the basic charge for power consumed. For domestic consump- tion in homes for example, Kenya Power charges a xed Sh120 per month fol- lowed by Sh2 for the rst 50KWh. Thereafter, up till 1500KWh, the utility charg- es Sh8.10 per Kwh. Anything beyond that is charged at Sh18.57/KWh. In addition, consumers pay for fuel cost charge, for- eign exchange rate uctua- tion adjustment, ination adjustment, ERC levy, Ru- ral Electrication Levy, and a 12 per cent VAT charge on all the above cost and charges save for the levies and ination adjustment. Manufacturers have in the past been vigorously opposed to power prices increase. In a statement on industrialization at a past function, Kenya Associa- tion of Manufacturers CEO Betty Maina said: “To say production cost in Kenya is one of the high- est globally is an understate- ment, with energy cost alone constituting over 40 per cent of the total manufac- turing costs. Kenya’s prod- ucts are increasingly nding it difcult to compete with those from other countries especially Asia because of the variations in the costs of doing business” She added that while Ken- yan manufacturers are pay- ing between Sh10 and Sh15 per kilowatt of electricity, their competitors in China and India pay the equiva- lent of between Sh2.50 and Sh3.80 per kilowatt of electricity. Therefore, this makes their products much cheaper than Kenya’s. 36 LOCAL THE STAR Monday, September 19, 2011 Can YOU outsmart the expert? NEW RATES: KPLC has adjusted charges to cater for fuel cost and foreign exchange Mututho says flower farms oppressive + business UP TO DATE, ACCURATE BUSINESS INFORMATION NEWS YOU CAN USE, EVERY DAY New power rates set to push up inflation ALY KHAN’S STAR PORTFOLIO smart N’S IO THE shilling remains the 2nd worst performing currency worldwide versus the dollar this year, after the Uganda shilling. The Kenya Shilling started the Year at 80.50 and has fallen 18.01% in 2011. The drought and poor rains spiked food and energy prices. A perception had taken hold that an IMF loan [which carried a condition that we should maintain 4 Months of hard currency import cover] effectively meant that the Government of Kenya was a seller of the shilling until it got to the 4 Month Cover Point. The Central Bank had argued that inflation was being triggered by circumstances beyond their control, the weather and that adjusting interest rates higher was therefore not the right response. The mood between the regulator and the market had become very adversarial. There has been a change though after the President requested that the IMF accelerate hard currency disbursements under the $506m loan. CBK sold dollars twice in the last 2 weeks, disavowing the notion that it would be selling the Shilling forever. And then the Central bank hiked the CBR 0.75%. Plus the rains came as well. Taken in Toto, I think that Selling the Shilling is no longer the NO BRAINER Trade. The Nairobi Stock Exchange [NSE20 Index] had fallen 24.255% through 6th September but has since rallied 4.4677% . There has been plenty of drama, what with CMC Holdings currently taking centre stage and suspended for 7 Trading days since Friday but I think CMC Holdings marks a tipping point for the Nairobi Stock Exchange. For long, ordinary shareholders operated in an asymmetric landscape versus the insiders. That asymmetry is being flattened. In fact, professional advisers need to exercise extreme caution about appending their signature to everything because CMC could tip right across a number of listed companies. I venture, CMC marks the moment we entered a ‘New Normal’ and that the hot breath of shareholder activism might be felt on many expensive collars. I think the market is signalling its for turning and therefore, I suggest the following portfolio. Sasini Tea and Coffee. Agricultural Companies carry their land at historical prices on their balance sheet. Sasini has a market cap of 3b Shillings. The value of its land in Ruiru is about Sh20b. They laid out a road map last week to narrow that discount. This applies to nearly all these Agricultural Companies. Think Limuru Tea. Kakuzi. KCB’s Profit After Tax expanded +41.573402% 1st Half. KCB has right sized its personnel, its everywhere in the region. The region will take off and KCB will ride in the Slipstream. Safaricom has been buffeted from all sides. Sunil Mittal’s Bharti Airtel’s price war. I accept, Safaricom has a high correlation to the ‘Kadogo’ Economy and its been very tough but on balance, I think all the bad news is baked into the price and none of the Good. THE SHILLING, NSE COULD BE TURNING FOR THE BETTER
Transcript of THE STAR Monday, September 19, 2011 business · Mututho accused the farmers of poorly paying their...
BY GEORGE MURAGE
THE parliamentary com-mittee on agriculture chairman, John Mututho has said twenty percent of ! ower farmers in Naiva-sha engage in unfair trade practices.
Mututho accused the
farmers of poorly paying their workers and polluting Lake Naivasha.
He said farmers must change their practices and improved workers salaries or close shop.
“Eighty percent of the ! ower farmers are doing a great job but the rest are to
blame for tainting the im-age of the rosy sector,”
Mututho who has pre-sented a bill in parliament seeking to raise salaries of workers in the agriculture sector to Sh10,000 prom-ised to soldier on with the move.
The Naivasha MP was
addressing journalists at the end of the two day Naiva-sha horticulture fair.
Kenya Flower Council Chief Executive Of" cer Jane Ngige said unreliable power supply, increased fuel costs and high labour costs had adversely affected the ! ower sector.
BY JAMES MBUGUA
POWER bills are set to rise dramatically after monopo-ly power distributor Kenya Power secured authoriza-tion to increase its fuel cost and foreign exchange ad-justments.
In a gazette notice issued last week, Kenya Power said it would henceforth charge a massive Sh8.21 extra for each Kilowatt Hour (KWh) consumed with the corre-sponding element of foreign exchange adjustment rising by Sh1.48 per KWh.
The move is likely to hit consumers hard with of" cial government data showing in! ation at 16.67 per cent for the month of August.
A rise in electricity bills will contribute to the Fuel and Power Index, an impor-tant component of the con-sumer prices basket that the Bureau of Statistics uses to calculate the rise in prices.
Manufacturers who see their power bills go up will also seek to pass on the extra costs to consumers further worsening the situ-ation.
“Notice is given that all prices of electrical energy will be liable to a fuel cost charge of plus 8.21 cents per Kwh for all meter read-ings taken in September 2011,” Kenya Power said in the gazette notice.
The two components are part of the surcharges that the power distributor charges to consumers in ad-
dition to the basic charge for power consumed.
For domestic consump-tion in homes for example, Kenya Power charges a " xed Sh120 per month fol-lowed by Sh2 for the " rst 50KWh. Thereafter, up till 1500KWh, the utility charg-es Sh8.10 per Kwh.
Anything beyond that is charged at Sh18.57/KWh.
In addition, consumers pay for fuel cost charge, for-eign exchange rate ! uctua-tion adjustment, in! ation adjustment, ERC levy, Ru-ral Electri" cation Levy, and
a 12 per cent VAT charge on all the above cost and charges save for the levies and in! ation adjustment.
Manufacturers have in the past been vigorously opposed to power prices increase. In a statement on industrialization at a past function, Kenya Associa-tion of Manufacturers CEO Betty Maina said:
“To say production cost in Kenya is one of the high-est globally is an understate-ment, with energy cost alone constituting over 40 per cent of the total manufac-
turing costs. Kenya’s prod-ucts are increasingly " nding it dif" cult to compete with those from other countries especially Asia because of the variations in the costs of doing business”
She added that while Ken-yan manufacturers are pay-ing between Sh10 and Sh15 per kilowatt of electricity, their competitors in China and India pay the equiva-lent of between Sh2.50 and Sh3.80 per kilowatt of electricity. Therefore, this makes their products much cheaper than Kenya’s.
36 LOCAL THE STAR Monday, September 19, 2011
Can YOU outsmart the expert?
NEW RATES: KPLC has adjusted charges to cater for fuel cost and foreign exchange
Mututho says fl ower farms oppressive
business UP TO DATE, ACCURATE BUSINESS INFORMATIONNEWS YOU CAN USE, EVERY DAY
New power rates set to push up infl ation
ALY KHAN’S STAR
PORTFOLIO
outsmart
ALY KHAN’S
PORTFOLIO
THE shilling remains the 2nd worst performing currency worldwide versus the dollar this year, after the Uganda shilling.
The Kenya Shilling started the Year at 80.50 and has fallen 18.01% in 2011. The drought and poor rains spiked food and energy prices. A perception had taken hold that an IMF loan [which carried a condition that we should maintain 4 Months of hard currency import cover] effectively meant that the Government of Kenya was a seller of the shilling until it got to the 4 Month Cover Point.
The Central Bank had argued that infl ation was being triggered by circumstances beyond their control, the weather and that adjusting interest rates higher was therefore not the right response. The mood between the regulator and the market had become very adversarial.
There has been a change though after the President requested that the IMF accelerate hard currency disbursements under the $506m loan. CBK sold dollars twice in the last 2 weeks, disavowing the notion that it would be selling the Shilling forever. And then the Central bank hiked the CBR 0.75%. Plus the rains came as well.
Taken in Toto, I think that Selling the Shilling is no longer the NO BRAINER Trade.
The Nairobi Stock Exchange [NSE20 Index] had fallen 24.255% through 6th September but has since rallied 4.4677% . There has been plenty of drama, what with CMC Holdings currently taking centre stage and suspended for 7 Trading days
since Friday but I think CMC Holdings marks a tipping point for the Nairobi Stock Exchange.
For long, ordinary shareholders operated in an asymmetric landscape versus the insiders. That asymmetry is being fl attened.
In fact, professional advisers need to exercise extreme caution about appending their signature to everything because CMC could tip right across a number of listed companies. I venture, CMC marks the moment we entered a ‘New Normal’ and that the hot breath of shareholder activism might be felt on many expensive collars.
I think the market is signalling its for turning and therefore, I suggest the following portfolio. Sasini Tea and Coffee.
Agricultural Companies carry their land at historical prices on their balance sheet. Sasini has a market cap of 3b Shillings. The value of its land in Ruiru is about Sh20b. They laid out a road map last week to narrow that discount.
This applies to nearly all these Agricultural Companies. Think Limuru Tea. Kakuzi.
KCB’s Profi t After Tax expanded +41.573402% 1st Half. KCB has right sized its personnel, its everywhere in the region. The region will take off and KCB will ride in the Slipstream.
Safaricom has been buffeted from all sides. Sunil Mittal’s Bharti Airtel’s price war. I accept, Safaricom has a high correlation to the ‘Kadogo’ Economy and its been very tough but on balance, I think all the bad news is baked into the price and none of the Good.
THE SHILLING, NSE COULD BE TURNING FOR THE BETTER
