Business News Highlights

Cost of electricity on the rise as government fails to keep promises

High tariffs offered to Kenya Power have dented President Uhuru Kenyatta’s pledge to cut electricity prices during his tenure despite injecting cheaper geothermal to the national grid.

Data from the Kenya National Bureau of Statistics indicate that middle class homes are paying more for power under the Kenyatta administration compared to the previous Kibaki regime — which had been blamed for making Kenya uncompetitive through costly electricity.

READ ALSO: Kenya Power on track to connect every consumer to grid by 2020

Households consuming 200 kilowatt hours (kWh) paid Ksh3,497 last month compared to Ksh3,094 in December 2012, five months before Kenyatta assumed power.

The higher electricity prices have also been linked to revision of value added tax (VAT) on electricity from 12 per cent to 16 per cent in September 2013.

Kenya injected 280 megawatts of cheaper geothermal energy to the grid, leading to reduced use of expensive diesel generators and ultimately lower fuel cost charge.

An extra fuel charge is added to normal power rates depending on the amount of diesel generation used and global fuel costs. The fuel levy now stands at Ksh2.85 per kWh from Ksh5.35 in December 2012, a drop of Ksh2.50.

But this gain was offset by the new Kenya Power tariffs brought into force in January 2014 and the second phase in July the same year that saw an increase in the fixed charge — payable regardless of consumption levels — and the energy charge, which account for more half of the monthly power costs.

Obama gives Kenya Ksh31.4 billion to fight HIV/ Aids

Outgoing US President Barack Obama has given Kenya’s fight against HIV/Aids a huge boost with the injection of US$306 million (Ksh31.4 billion) into treatment and prevention programmes, which will be rolled out in 23 counties across the country over a five-year period.

bama’s administration plans to award contracts for services in counties over the period, according to procurement documents by the US Agency for International Development (USAid).

The primary aim of the HIV Service Delivery Support Activity, as the programme is titled, is to improve HIV detection and treatment while strengthening “institutional accountability” for community, facility and county HIV responses.

“Contractors are expected to collaborate with and support county leadership and other implementing agencies and partners across the system regardless of agency or funding source to ensure HIV services are integrated and complementary,” USAid said in the request for proposals issued on December 27.

Mr Obama has during his presidency scaled up the President’s Emergency Plan for Aids Relief (PEPFAR); a US aid programme that offers support of anti-retroviral treatment, testing, counseling, and other prevention measures around the world.

The contractors for the USAid programme are expected to serve on behalf of the Obama administration as a “lead agency” at the Kenyan county level, contributing to the capacity of each county to “operationalise and oversee clinical HIV services.”

KQ targets business travellers in codeshare deal with Hong Kong

A Chinese tourist (C) poses for a photo with traditional Kenyan Masaai dancers upon her arrival with a China Southern Airline plane at Jomo Kenyatta International Airport (JKIA) in Nairobi.  EPA/DANIEL IRUNGU

A Chinese tourist (C) poses for a photo with traditional Kenyan Masaai dancers upon her arrival with a China Southern Airline plane at Jomo Kenyatta International Airport (JKIA) in Nairobi. EPA/DANIEL IRUNGU

National carrier Kenya Airways has signed a codeshare agreement with Hong Kong Airlines increasing its frequency between Nairobi and Hong Kong to daily flights with an eye on the growing trade between the two cities.

KQ, as the carrier is known by its international code, currently flies three times a week to Hong Kong but the new agreement with its Asian partner increases this to a daily flight.

READ ALSO: Kenya Airways posts Sh26.2 billion loss as carrier’s turnaround strategy soldiers on

The codeshare deal between the two airlines will also see Hong Kong Airlines book its customers flying to Nairobi from Thailand on KQ — which presently operates one daily flight to and from the Bangkok’s capital.

“This code-sharing partnership will enable us offer our customers seamless connection, especially for our passengers in the region who mainly travel to these Asian cities for business,” KQ chief executive Mbuvi Ngunze said in a statement.

Code-sharing allows airlines to sell seats on their aircraft — marketing carrier — as if they were their own.

The passengers are later transferred onto the partnering airline — the operating carrier.

Hong Kong, the world’s 9th largest trading economy, is one of the forces behind China’s emergence as a global economic giant.

Over the past decade, China has become Kenya’s largest source of foreign direct investment.

US Court dismisses Ksh20 million case against MKU

A United States court sitting in Atlanta has dismissed a suit filed by a filmmaker seeking $200,000 (Ksh20 million) compensation from Mount Kenya University (MKU) over a botched movie deal.
XL Squad Entertainment LLC had sued MKU for backing out of the project after the filmmaker incurred costs in starting production of a movie titled The Last Result.

The filmmaker claimed it spent more than $170,000 (Ksh17 million) after MKU led it to believe that the institution would fund the entire project.

READ ALSO: Kidero seeks court help over Sh65 bn dues owed by state

But United States district judge Thomas Thrash Jr ruled that the only valid agreement between the university and XL Squad Entertainment allowed either party to back out of the project at any time without explanation.

The MKU had signed a letter of intent to produce the movie with XL Squad Entertainment, but pulled out of the deal claiming that the Atlanta-based filmmaker had made false representations regarding its role in the production.

XL Squad Entertainment held that the letter of intent only provided for backing out before January 23, 2015 but the university terminated the deal in July.

“In this case, the parties seem to have anticipated some sort of final agreement that would be signed between them. They also provided for either party to unilaterally withdraw from the deal ‘at any time’ and ‘for any or no reason’. The presence of these clauses seems to indicate that the parties did not mean to be bound by the terms of the proposed deal beyond their good faith efforts to negotiate. Rather, the letter of intent simply stood as an outline for a future final agreement,” Justice Thrash Jr ruled.

The judge ruled that XL Squad Entertainment did not provide any proof that it had registered copyrights to the movie hence could not file a claim for infringement by the Kenyan university.

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