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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

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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.

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Dangote Refinery in crude supply negotiations with Libya

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To get around issues with local supply, Nigeria’s Dangote refinery is in negotiations with Libya to get crude for the 650,000 barrels per day (bpd) plant. A senior official stated that the refinery would also look for Angolan oil.

The $20 billion refinery, the largest in Africa, was constructed on the outskirts of Lagos by Africa’s richest man, Aliko Dangote. Its purpose is to eliminate Nigeria’s reliance on imported fuels due to inadequate refining capacity.

Since starting operations in January, Dangote has not been able to obtain sufficient crude supplies from Nigeria, the largest oil producer in Africa, beset by poor investment, theft, and pipeline vandalism. Dangote has had to buy petroleum from the US and Brazil, among other places.

“We are talking to Libya about importing crude,” Dangote refinery senior executive Devakumar Edwin told Reuters late on Saturday. “We will talk to Angola and some other African countries.”

He added that foreign traders and oil corporations were among the largest purchasers of Dangote’s gasoil, which was mostly being exported, but he would not elaborate on the specifics of the discussions.

“The biggest off-takers are the two big traders Trafigura and Vitol and BP and, to some extent, even TotalEnergies. But all of them are saying they are taking it to offshore,” Edwin said.

According to traders and shipping statistics, Dangote is displacing European refiners in the gasoil market by increasing exports to West Africa.

By 2050, the nuclear sector wants to treble its capacity.

According to Edwin, Dangote’s oil trading division was running, employing people in Lagos and London to assist with product sales and supply management. The intended trading arm was initially revealed by Reuters in March.

In a recent dispute with Dangote, Nigeria’s upstream authority claimed that the fuel’s sulphur concentration exceeded the mandated 200 parts per million (ppm). Rejecting that claim, Aliko Dangote stated that sulfur levels had been higher at the beginning of production but have since dropped to 88 parts per million (ppm) and would reach 10 parts per million in early August as output increases.

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As inflation slows down, Angolan central bank maintains stable interest rate

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The central bank of Angola maintained its main interest rate at 19.5% on Friday, noting a possible short-term improvement in the supply of necessities and a possible decrease in inflation.

To contain growing inflation, which has reached 30%, the Bank of Angola hiked its main rate by 50 basis points at its most recent monetary policy meeting in May after raising it by 100 basis points in March.

The annual inflation rate increased last month, from 30.16% in May to 31.00%, although at a slower rate than in prior months.

“The decision (on Friday) was motivated by the prospect of a slowdown in the rate of price growth and an improvement in the supply of essential goods,” said Central Bank Governor Manuel Tiago Dias.

“If current conditions prevail from August onwards, we predict a slowdown in year-on-year inflation,” Tiago Dias added.

Since the middle of last year, inflation has been increasing in the nation that produces oil in Africa.

By September, the central bank will make its next move on monetary policy.

 

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