Thursday, 27 September 2012

KenGen invites bids for 560MW geothermal plants

 Thu Sep 27, 2012 5:54am GMT
NAIROBI (Reuters) - Kenya's main electricity producer, KenGen, has invited parties to submit bids for the development of 560 MW geothermal power plants, the company said on Thursday.
The company said it planned to develop the power plants in phases of 140 MW each at Olkaria within the east African nation's Rift Valley under a joint venture arrangement in which successful bidders would build, and later transfer, the facilities back to the firm after 10 to 20 years.
"The successful bidder or consortium would be the majority shareholder," KenGen said in a call for the bids in the Kenyan newspaper, the Daily Nation.
Kenya is the first African country to drill geothermal power, tapping vast reserves of steam energy in the country's Rift Valley region, which remains geologically active.
The country has the potential to produce 7,000 MW and is targeting production of at least 5,000 MW of geothermal power by 2030.
Although expensive to drill initially, development of cheaper geothermal power means the country will come to rely less on thermal power, prone to the vagaries of high international prices, and rain-fed hydroelectric dams.
The cost of energy is a key factor in the east African nation's inflation levels.
Kenya's peak electricity demand has risen to about 1,200 MW, compared with 780 MW in 2002, driven by economic growth. KenGen produces 1,141 MW and the rest is generated by independent power producers which mostly rely renewable energy such as wind power.
KenGen said in February it planned to raise $12 billion to build six geothermal power plants that should generate 585 MW by 2016, as it pushes to diversify its power sources.
The company on Wednesday posted an 11 percent rise in its full year pretax profit to 4.045 billion shillings, helped by increased output from new plants.
East Africa's biggest economy has embarked on capital-intensive alternative power generation projects, in a bid to reduce dependency on unreliable rain-fed hydroelectric dams and thermal power prone to erratic rainfall.

TNK-BP co-owners to bid for entire BP stake

A British Petroleum (BP) logo is seen at a petrol station near the Burj Khalifa in Dubai August 29, 2012. REUTERS/Jumana ElHeloueh
MOSCOW | Wed Sep 26, 2012 1:16pm EDT
MOSCOW (Reuters) - The billionaires who own half of Russian oil firm TNK-BP plan to make a cash offer for BP's 50 percent stake, raising the prospect of a bid contest with state-backed Rosneft, which analysts say could net BP well over $21 billion.
Such an auction would pit the four Soviet-born tycoons, who amassed their assets in the chaotic 1990s, against Rosneft's chief executive Igor Sechin, a confidant of President Vladimir Putin who wants to build his company into a national champion.
A source close to the AAR consortium, which groups Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, said it would make a binding offer by mid-October.
"We will pay cash, but have not yet determined the price," said the source.
AAR had previously said it was willing to pay $10 billion for half of BP's stake in Russia's third-largest oil company.
But BP, which put its entire TNK holding up for sale in June after a collapse in shareholder relations, was not interested in that offer, industry sources said.
AAR then expanded the scope of its bid after Rosneft said it also wanted to buy BP's stake, for cash and stock.
Analysts say BP now stands to make three or four times its original investment of $7 billion made in 2003, as it faces multi-billion-dollar damages arising from the Gulf of Mexico disaster in 2010.
"Anything that leads to the end of a fight (between TNK's shareholders) with an impossible solution is positive," Riccardo Orcel, deputy chief executive of VTB Group , a Russian state bank close to Rosneft, told the Reuters Russia Investment Summit on Wednesday.
"TNK-BP is a phenomenal company - it has probably been the best ever investment that BP has made."

Under a shareholder agreement, AAR has exclusive rights to make an offer by a mid-October deadline that falls 90 days after BP put the stake up for sale. Other suitors may then seek to strike a deal, creating the prospect of a bidding contest.
AAR would "likely" fund the deal by borrowing through TNK-BP and tapping other funding, the source said. How much the AAR shareholders themselves might invest is unclear. The consortium will start talks with banks this week.
Bankers have told Reuters that it would be possible for AAR to finance a significant portion of any purchase by leveraging up TNK-BP, which has paid out $19 billion in dividends since BP came into the venture in 2003.
TNK-BP posted a record $14.6 billion in earnings before interest, taxation, depreciation and amortisation (EBITDA) last year. At year-end it had a low debt to equity ratio of 26 percent.
With net debt of around $3 billion now and EBITDA estimated at $13 billion, "there is huge capacity for additional debt", the AAR source said.

BP expects to receive bids from both AAR and Rosneft and will consider them on their merits. "We will evaluate, negotiate and make a decision," a spokesman said.
Bankers and analysts say that BP is likely to prefer Rosneft as a buyer and would seek to use good relations with the Kremlin to gain new opportunities for oil and gas exploration in Russia.
BP has, however, lost the Arctic offshore territory that it had hoped to explore with Rosneft in a joint venture deal which was killed off by a challenge from its TNK partners.
Rosneft subsequently turned to ExxonMobil for an Arctic deal, with the U.S. firm's chief executive Rex Tillerson now a regular visitor to Russia.
Under a sale of its TNK stake to Rosneft, BP would plough back part of the proceeds into Rosneft stock, a source familiar with its thinking said, but would not embark immediately on any joint exploration operations with the Kremlin-backed company.
Meanwhile the 12 international banks that have already started financing talks with Rosneft are unlikely at the same time to talk about financing for AAR's full bid, banking sources in London said.
But bankers said the final outcome could be for Rosneft to eventually take complete control of TNK-BP, creating a global major pumping nearly 4 million barrels per day of oil.
BP could be joined as a minority shareholder in the merged group by a Chinese buyer, fulfilling government plans to sell down the state's 75.1 percent stake in Rosneft, the bankers said.

(Additional reporting by Isabel Witt in London; Editing by Louise Heavens and Greg Mahlich)
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Wednesday, 26 September 2012

The workplaces building Africa's business future

Building site in Kampala
Under construction: Like much of Kampala, Uganda's start-up ecosystem is growing from the ground up, with the help of flourishing co-working spaces and technology hubs across the city     
Thomas Ssemakula is an impressive young man.
Smartly dressed in a shirt and tie, he has just come from a meeting with an investor who has agreed to fund his agricultural services start-up. He smiles widely, his happiness infectious as he talks about how his business got started.
"I started Brave East Africa without a coin on me. That was June 2010 when I finished my final year at Makere University, I was doing bachelor of animal production at the college of veterinary medicine," he says.
Inspired by his single parent mother, Mr Ssemakula set about creating what he hopes will become a multinational agribusiness that helps east African farmers build profitable and sustainable businesses.

"My mother has been father and mother, supporting the family slowly through her work. I wanted to follow the same path."
The first step was to find somewhere to work from. But with no money options were limited - so he came up with the idea of trading veterinary officer services for a seat in an internet cafe, run by a group of farmers.

Writing for a newspaper about agriculture, in return for having the name of his business and contact details prominently displayed, attracted customers, bringing precious funds to invest in the business. Finally he was ready to move to an office environment which would allow him to meet clients and investors and to be taken seriously.
Setting up on your own in east Africa isn't cheap. Not only is there rent to consider, there's furniture, utilities and the internet connection that remains prohibitively expensive for ordinary Ugandans.

So instead Mr Ssemakula decided to become a member of the Mara Launchpad, one of a new breed of home-grown co-working spaces and innovation hubs in Kampala.
Community property "If you're working from home or out of your car here in Uganda people don't take you seriously," says Mara Launchpad's Nigel Ball.
Mara Launchpad The Mara Launchpad is on the third floor of an office block, above a Tusky's supermarket, just across the road from Makere University.
"They're worried because trust levels are lower, and if you don't have an office how do they track you down if things go wrong."
Providing office space is a simple thing to do, says Mr Ball. But what the Launchpad wants to do is give technology and non-technology companies credibility in the eyes of potential clients or partners.
"Getting the right kind of office that projects the right kind of image, that's in the right location, at the right price, is not an easy task," he says.
There's a large open plan room filled with desks, with wifi connectivity, as well as various meeting rooms. In the room next door regular Friday night innovation events are held, organised by the Mara Foundation and the Angels Finance Corporation, the people behind the Launchpad.
The Grameen Foundation's Ravi Agarwal The Grameen Foundation's Ravi Agarwal talks to Launchpad members about how to market their businesses successfully at the regular Friday night innovation event
Business incubation and mentorship is available, as well as a six week acceleration program that runs twice a year.
Ideas exchange Over the last couple of years, tech hubs and other co-working spaces have started popping up in towns and cities worldwide.
For emerging economies, the services and advice they offer can have even more impact than in the developed world. Taking the lead from the granddaddy of them all, Nairobi's iHub, they are spreading rapidly across the African continent.
In an office block on a residential street in Kampala, Barbara Birungi sits at her desk with a cup of tea. She is the manager of the Hive CoLab, less a co-working space than a start-up incubator. Technology entrepreneurs who fit their criteria can spend two years based in the open plan offices.
"It's not about strict business. It's also about coming here to share your ideas, and collaborate. Because out of sharing and collaborating come ideas," says Ms Birungi.
Hive CoLab The Hive CoLab was opened to give the technology scene in Uganda a space that they could call their own and come and collaborate, says Barbara Birungi
"Apart from just offering them a space we see how we can take an idea to the next level. Because many startups fail within the first two years of existence."
As well as regular events and Mobile Monday innovation sessions, the incubator offers mentoring and support finding investors, helping them to protect their intellectual property.
"We have seen examples where investors actually take up someone's idea, and because there's no paperwork, there's no proof they have done that," she says.
Kampala's newest space is Outbox, a co-working space and technology start-up incubator and accelerator that counts Google among its partners.
Richard Zulu is a co-founder. He says working with developers and realising they needed help to get them to the next level pushed him to open the hub.
Outbox hub The Outbox hub is a co-working space for a diverse group of people and a technology incubator and accelerator
"It's very important that the people that start these places share the same passions as the people that work in them," says Mr Zulu.
"A place like this creates a focal point, where you'll be able to meet A, B, C, D people in the tech community. Through the co-working initiative it drives entrepreneurship and innovation through the participants of the space.
"The core is community."
The space specialises in mobile and web start-ups, and Outbox is already home to at least one award-winning business.
Smooth transitions Senegalese-born social entrepreneur and blogger Marieme Jamme mentors founders and managers of some of Africa's technology hubs.
She believes that while the hype surrounding the new hubs is increasing the visibility of African developers, the type of mentorship available in the Ugandan hubs is vital to their success. And it's not available at all of the spaces opening up across the continent.
"You have ideas generated within those tech hubs, but they don't know how to scale those businesses. They have the business acumen and the passion, but they don't know how to go through setting up that business, or writing that business plan.
"You'll find out that 90% of them don't know how to do it. But when an investor comes in they hide their discomfort, and pretend they know how to do it. This is African pride, this is inside the African mindset.
"It's not because they're not good people, it's the way the mindset works."

Another problem according to Ms Jamme is the gap between theoretical and practical knowledge when it comes to coding and development.
"That's why it's very important for us to go back and say, it's ok if you don't know, and work out how you help these entrepreneurs scale their businesses.
"How can you move the coder from a coder to a CEO?"
Mr Ssemakula is certain coming to the Mara Launchpad was the right thing to do.
As well giving farmers agricultural and financial advice, the company is working on technology to link the farmers to high-value markets using text messages.
"The Mara Launchpad has changed my business by providing me with a professional business environment that commands more credibility in the eyes of my customers, in this case the farmers, who find me in such a setting and they see my business as a serious business."

 His dreams of sitting at the helm of a multi-national agribusiness are becoming more tangible, with plans for his first branch office in Nairobi, Kenya.
"[The Launchpad] has given me access to free business mentorship and how to go about being an entrepreneur in a practical way."
"I'm glad to be here."

Wednesday, 19 September 2012

Russia's Putin meets with top Rosneft, BP executives

SOCHI, Russia, Sept 18 | Tue Sep 18, 2012 3:52pm EDT
(Reuters) - Russian President Vladimir Putin met on Tuesday with Rosneft Chief Executive Igor Sechin and BP CEO Bob Dudley and Chairman Carl-Henric Svanberg to discuss a potential expansion of the British oil major's presence in Russia.

"Right now there is a meeting of the president with Sechin and his colleagues from BP - Svanberg and Dudley," said Putin's spokesman Dmitry Peskov, speaking to journalists in Sochi, where Putin was holding the meeting.

"At the meeting, the issue being discussed is connected with the continuation of the broadening of the presence of the company BP on the Russian market."

In June BP announced it would start the process of selling its 50 percent stake in Russia's third largest oil company TNK-BP, and a month later Rosneft said it was in talks to acquire half of the troubled venture.

In return for its share in TNK-BP, the British oil major may gain access to other assets in Russia.
Earlier this month Sechin said state-owned Rosneft had taken a time-out in talks to buy the TNK-BP stake to avoid falling foul of the shareholder pact.

Under the TNK-BP shareholders agreement, outside buyers may hold talks on buying a stake, but cannot close a deal for 90 days.

Tuesday, 18 September 2012

US Election 2012: leaked video shows Mitt Romney saying Obama voters are 'government dependents'

Mitt Romney's efforts to relaunch his presidential campaign were overshadowed on Monday after video emerged showing him appear to dismiss nearly half the country as government dependents who "believe that they are victims".

11:08PM BST 17 Sep 2012

The Republican told a group of donors that the 47 per cent of Americans who do who do not pay income tax would automatically support President Barack Obama because they "believe that they are entitled to health care, to food, to housing, to you-name-it".
"My job is is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives," Mr Romney says in the video, which was filmed surreptitiously and leaked to Mother Jones magazine.

The footage, shot by an unknown film maker, is potentially explosive for the multimillionaire former private equity executive who is often caricatured by Democrats as a wealthy man out of touch with the hardships of everyday Americans.

It reportedly shows Mr Romney addressing wealthy donors earlier this year and speaking candidly about his strategy of focusing on the small sliver of the population that remains undecided ahead of November's election and not attempting to win over low income voters.

"There are 47 percent who are with [Mr Obama], who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it," Mr Romney said. "And they will vote for this president no matter what."

The Obama campaign immediately seized on the footage Jim Messina, the President's campaign manager, said: "It’s hard to serve as president for all Americans when you’ve disdainfully written off half the nation".
In the footage, Mr Romney also cautions against harshly criticising the President because it could alienate voters who supported him in 2008 and continue to like him personally, even if they disapprove of his handling of the economy.

"When you say to them, 'Do you think Barack Obama is a failure?' they overwhelmingly say no. They like him. But when you say, 'Are you disappointed that his policies haven't worked?' they say yes. And because they voted for him, they don't want to be told that they were wrong, that he's a bad guy, that he did bad things, that he's corrupt."

Mr Romney also jokes about his father, George Romney, who was born in Mexico to American parents, suggesting that there would be an electoral advantage if he were of Hispanic descent.
"He was unfortunately born to Americans living in Mexico. He lived there for a number of years. I mean, I say that jokingly, but it would be helpful to be Latino," he said.

Monday, 17 September 2012

Meet The Blogger Who May Have Just Saved The American Economy

The Fed's announcement of QE Unlimited was a clear departure from past strategy: Rather than seeing asset purchases as an amount of money injected into the financial system, the Fed is now aggressively using the power of future guidance.

 Blogger and Bentley College professor Scott Sumner

It's a step in the direction of Nominal GDP targeting, the hot idea endorsed recently by Michael Woodford at the Jackson Hole conference. But while Woodford is one of the most respected monetary academics in the world, the economist who deserves the most credit for taking a wonky idea and making it mainstream is Bentley economics Professor Scott Sumner who writes the blog The Money Illusion.
Tyler Cown of Marginal Revolution writes:
I haven’t seen anyone else say it yet, so I will.  The Fed’s policy move today might not have happened — probably would not have happened — if not for the heroic blogging efforts of Scott Sumner.  Numerous other bloggers, including the market monetarists and some Keynesians and neo Keynesians have been important too, plus Michael Woodford and some others, but Scott is really the guy who got the ball rolling and persuaded us all that there is something here and wouldn’t let us forget about it.
And Matt Yglesias writes:
Professors at Bentley University who've never published a famous book don't normally shift the public debate. But Sumner's vigorous and relentless blogging throughout the crisis on the potential of expectations-focused monetary policy really broke through. It all began with some links from Tyler Cowen and perhaps a tiff with Paul Krugman. I became a regular reader and his ideas have done a lot to influence me, and you can clearly see the influence on Ryan Avent at the Economist, Matt O'Brien at the Atlantic, Ramesh Ponnuru at National Review, Josh Barro at Bloomberg, and a few of the Wonkblog contributors. Outside the exciting world of online economics punditry, NGDP targeting hasn't (yet!) caught fire as rapidly but it gained explicit allegiance from Christina Romer, Krugman, the economics team at Goldman Sachs, and eventually Chicago Federal Reserve President Charles Evans who started out with a different but similar-in-spirit program.
That really is the key here: Not only has he been incredibly influential, but he really has done it almost entirely through his blog. Also, the bi-partisan swath of his adherents is remarkably rare for an economic pundit.
It's also rare for ideas to simultaneously gain currency among academics and Wall Street economists like Goldman's Jan Hatzius, who endorsed the idea about a year ago in a much buzzed-about note.
The jury, obviously, is still out on the Fed's actions, but the folks we like to listen to, like Bill McBride at Calculated Risk, are very hopeful that this can accelerate the economy.
And if it does, then Sumner's blogging and promotion of the idea that the Fed should signal its unwillingness to let off the gas pedal, until the economy has more than recovered, will deserve major credit. Bloggers have accomplished some remarkable things, and this one will be one of the biggest.
On the FAQ section of Sumner's blog, he explains Nominal GDP targeting in the simplest means possible:
1.  OK, if you’re so smart what should we do?
It is not about being smart, it’s about setting specific goals and promising to do whatever one can to meet those goals.
I’d like to see the Fed set an explicit target path for nominal GDP.  But at this point even a price level or inflation target would be better than nothing.
Do “level targeting,” which means you commit to a specified path for NGDP or prices, and commit to make up for any deviations from the target path.  Thus if you target NGDP to grow at 5% a year, and it grows 4% one year, you shoot for 6% the next.
Let market expectations guide Fed policy.  Ideally this would involve the sort of NGDP futures targeting regime that I have proposed in this blog.  Right now they could focus on the yield spread between inflation-indexed and conventional bonds.  The spread is currently than 1/2% on two year bonds, which means inflation expectations are far too low for a vigorous recovery.  It should be closer to 2%.
The Fed should stop paying interest on excess reserves, and if necessary should put a small interest penalty on excess reserves.  This would encourage banks to stop sitting on all the money that has been injected into the system.
If they did these things it would be easy to get inflation expectations up to 2%.  But if I am wrong, they should do aggressive quantitative easing (QE), something they have not yet done (despite misleading news reports to the contrary.)  They should buy Treasury bills and notes, with Treasury bonds and agency debt available as a backup.