Connect with us

VenturesNow

Kenya’s $3bn show-piece railway project makes $100m loss in first year

Kenya’s flagship railway project registered losses of $100m (£76m) in its first year of operation, according to the transport ministry

Published

on

Kenya’s flagship railway project registered losses of $100m (£76m) in its first year of operation, according to the transport ministry.

The BBC reports that the China-funded standard gauge railway – which links the coastal city of Mombasa to the capital, Nairobi, – was funded by a $3bn loan from China’s Exim bank, to be repaid over 15 years.

Kenya dismissed concerns that the railway project was overpriced, unsustainable and economically unviable.

The railway line was central to President Uhuru Kenyatta’s re-election strategy, launched only months before the presidential poll last year.

Read Also: World’s largest refinery to cost $10bn; Dangote secures $650m loan

While passenger trains get fully booked regularly, the minister said it was hard convincing businessmen to switch cargo transportation from road to rail.

Transport Minister James Macharia told a parliamentary committee that the state was now discussing with major private industries on how to make rail transport more viable.

The repayment begins next year, and if the railway doesn’t break even by then, Kenyan taxpayers will have to foot that bill.

Economists estimate that China now owns 70% of Kenya’s debt. However, the government hopes the railway will start making a profit in the next financial year.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

VenturesNow

FX bank swaps account for 30% of Nigeria’s external reserves— Fitch

Published

on

Global credit ratings firm, Fitch, has claimed that approximately 30% of Nigeria’s external reserves is comprised of foreign exchange (FX) bank swaps.

 

This disclosure underscores ongoing uncertainties regarding the country’s net FX reserves, exacerbated by opaque entries amounting to nearly $32 billion in FX forwards, over-the-counter futures, and currency swaps listed as off-balance sheet commitments in the Central Bank of Nigeria’s (CBN) consolidated financial statement for 2022.

 

 

This disclosure underscores ongoing uncertainties regarding the country’s net FX reserves, exacerbated by opaque entries amounting to nearly $32 billion in FX forwards, over-the-counter futures, and currency swaps listed as off-balance sheet commitments in the Central Bank of Nigeria’s (CBN) consolidated financial statement for 2022.

 

 

The Central Bank of Nigeria’s (CBN) consolidated financial statement for 2022 lists approximately $32 billion in FX forwards, over-the-counter futures, and currency swaps as off-balance sheet commitments.

 

These opaque entries, combined with this disclosure, highlight the continued uncertainty surrounding the nation’s net foreign exchange reserves.

 

“Uncertainty continues over the net FX reserve position, with a particular lack of clarity on near USD32 billion of ‘FX forwards, OTC futures, and currency swaps’ recorded as an off-balance sheet “commitment” in CBN’s last consolidated financial statement for 2022.

 

“Fitch estimates around 30% of Nigeria’s reserves are made up of FX bank swaps, although we expect most of these to continue to be rolled over.”

Uncertainty in Nigeria’s FX Reserves.

 

In its latest credit outlook for the country, Fitch noted that the lack of clarity over the precise size and composition of Nigeria’s FX reserves remains a significant constraint on the nation’s sovereign credit profile.

 

 

Fitch believes that the majority of FX bank swaps will be rolled over in spite of these worries, which might offer some brief stability in the reserves management. Additional report insights point to a recent increase in non-resident inflows into Nigeria, which are being driven by more stringent monetary policy measures and a greater formalization of FX activities.

 

The report also showed that by the end of April, Nigeria’s gross foreign exchange reserves had dropped from $34.4 billion in mid-March to $32.2 billion. Fitch stated that in order to support the currency, FX sales to Bureau de Change operators and debt repayments account for a portion of the decline.

 

 

By the end of 2024, the FX reserves are expected to fall to just 4.2 months’ worth of current external payments, which is in line with the “B” median.

 

“Gross FX reserves fell to USD32.2 billion at end-April, from a peak of USD34.4 billion in mid-March, partly reflecting repayment of existing debt obligations, and FX sales to BDCs to support the currency.

 

“Fitch projects a broadly flat current account surplus, averaging 0.5% of GDP in 2024-2025, supported by a modest rise in oil production and remittances.

 

“We forecast FX reserves to fall to 4.2 months of current external payments at end-2024 (‘B’ median 4.2), from 4.4 months at end-2023.”

Continue Reading

VenturesNow

Nigeria offers oil majors faster exit if …

Published

on

Oil-rich West African country, Nigeria, has offered major oil companies, such as Exxon Mobil and Shell, that planned to leave the country’s onshore oil an offer for quicker exit approval on the ground that they take responsibility for spills rather than wait for authorities to apportion blame.

The regulator tt a meeting with the companies in Abuja, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) chief Gbenga Komolafe offered a short-term option with faster approval if the companies commit to cleaning up spills and compensating communities.

To concentrate on deepwater drilling, Exxon, Shell, TotalEnergies, and Eni have all attempted to withdraw from Nigeria’s oil-rich Niger Delta in recent years, claiming security issues including theft and sabotage. Regulatory obstacles have, however, caused their exits to be postponed.

“We have the undertaking here. The consent here though fixed for June, could be much shorter,” he said.

“If you agree to take that option, you sign the undertaking knowing that there are obligations to be fulfilled,” Komolafe said.

The second long-term alternative might push back the final approval until August by requiring NURPC to identify and assign all liabilities first. In order to safeguard the environment, local populations, and the long-term viability of the assets, NURPC is attempting to strike a compromise between expediting the exit for oil majors.

According to them, the corporations are considering their alternatives and will reply shortly. Meanwhile, some observers say the accelerated option could cost oil majors millions of dollars for cleanups and reparations.

“The risk with option 1 is the transferor will continue to take responsibility for the asset until the process is completed while option 2 puts them at the mercy of the regulator since they waived their right to deemed approval,” said Ayodele Oni, energy lawyer at Lagos-based Bloomfield law firm.

Following the majors’ withdrawal, 26 onshore blocks with a combined estimated reserve of 13.76 billion barrels of oil, 2.70 billion barrels of condensate, and roughly 90,717 billion cubic feet of gas are up for grabs, according to NUPRC.

“We aim to ensure that the companies that take over these blocks have the necessary financial resources and possess the technical expertise required to responsibly manage the blocks throughout their lifecycle under good asset stewardship practices,” Komolafe said.

Continue Reading

EDITOR’S PICK

VenturesNow1 hour ago

FX bank swaps account for 30% of Nigeria’s external reserves— Fitch

Global credit ratings firm, Fitch, has claimed that approximately 30% of Nigeria’s external reserves is comprised of foreign exchange (FX)...

Metro1 hour ago

Nigeria: Civil society group sues 36 govs, Wike over N5.9tn, $4.6bn loans

A civil society organisation in Nigeria, Socio-Economic Rights and Accountability Project (SERAP), has dragged the 36 state governors of the...

Metro16 hours ago

Kenya: President Ruto hints at ‘dire’ weather outlook as Cyclone Hidaya nears

President William Ruto has announced that the severe rains that have been plaguing Kenya for the past several weeks resulting...

Politics16 hours ago

Again, Rwanda denies it attacked displaced persons in DR Congo

For the sixteenth time, Rwanda refuted US charges on Saturday that its troops attacked a camp for internally displaced persons...

VenturesNow16 hours ago

Nigeria offers oil majors faster exit if …

Oil-rich West African country, Nigeria, has offered major oil companies, such as Exxon Mobil and Shell, that planned to leave...

VenturesNow16 hours ago

Nigeria’s Security Exchange chief to meet foreign, local crypto exchanges, others over crypto regulation

On Monday, local and international cryptocurrency exchanges will meet with Dr. Emomotimi Agama, the recently appointed Director General of the...

VenturesNow16 hours ago

Rhino Resources, BP-Eni JV sign agreement for Namibia offshore licence

Rhino Resources Namibia and a BP-Eni joint venture have agreed to share a 42.5% stake in a block located in...

Politics17 hours ago

Liberia: President Boakai signs order to create war crimes court

To provide long-overdue justice to those who suffered grave injustices during the two civil wars that raged in Liberia, President...

Musings From Abroad17 hours ago

US official accuses Russian troops of entering base housing US military in Niger

According to a senior United States defence official quoted by Reuters, Russian military soldiers have entered an air base in...

Politics17 hours ago

Nigeria’s presidency insists reforms prevented economic collapse

Nigeria’s presidency on Thursday reiterated that the current administration’s economic reforms of the past one year “saved the life of...

Trending