TULLOW STRIKES OIL IN KENYA

Tullow Oil has confirmed that it struck oil in its Turkana Block 10BB. The discovery was made last year but the company had said it would give a briefing on the progress in May.


The confirmation was done by President Mwai Kibaki. The Ministry of Energy will at 4PM give an press briefing on the same.


Even better, this is light crude oil as compared to Uganda's heavy crude that is usually solid at room temperature.


Tullow is the same company that discovered oil in Uganda. 



In stunning fashion, the fortunes of once vast and desolate wasteland thas is Turkana seem to be changing by the day.


In the same county, Africa's largest wind farm project is to be built to generate 300MW of power that will be transmitted to the national grid.


Geothermal potential is being explored with indications that we could get substantial energy there.


The massive LAPSSET project is set to pass there with rail, road and pipeline.


Tullow Oil shares were boosted by the announcement in London.

Tullow's exploration director Angus McCoss said:

"This is an excellent start to our major exploration campaign in the East African rift basins of Kenya and Ethiopia. to make such a good oil discovery in our first well is beyond our expectations and bodes well for the material programme ahead of us."

THE BIG ONE: KQ - TITUS NAIKUNI TO EXIT KENYA AIRWAYS

Titus Naikuni.

Titus Naikuni, the 6 foot 3 inch tall CEO of Kenya Airways is set to leave the company sometime this year, it has emerged. Reports indicate he could be headed for a career in politics with some pundits mentioning the Kajiado governorship as a possible next stop.


Naikuni, CEO since February 2003, reportedly will be succeeded by Mbuvi Ngunze, the current Chief Operations Officer who joined KQ in August last year.


Timelines are not clear but quite likely, Naikuni will steer the company's ongoing Sh21billion rights issue before making an official announcement.


Like Michael Joseph when he headed Safaricom or James Mwangi at Equity Bank, Naikuni is viewed as virtually synonymous with Kenya Airways and it is hard to imagine the airline without him at the helm.


But Ngunze comes with impressive credentials and the management team is quite vibrant. Ngunze is a Lafarge alumni having held various senior positions at Bamburi and Lafarge group.


As CEO Titus Naikuni has never been known to suffer fools gladly or have the patience for them. It is only until recently that Naikuni has eased up and relaxed somewhat and seems not to take things as seriously as he did before.


A member of the dream team of technocrats as PS Transport between 1999-2001, Naikuni served with among others Martin Oduor-Otieno, currently CEO KCB Group, Mwaghazi Mwachofi, the current Finance Director of the Aga Khan Agency for Microfinance in Geneva, Richard Leakey, Shem Migot-Adholla and Wilfred Mwangi.


Naikuni's departure comes at a time when the company has launched a 10-year business plan that will see it treble its fleet with an emphasis on Boeing 787 Dreamliners and Boeing 777s for its long-haul fleet along with 737s and Embraer 190s.


It will also seek to raise over US$3billion for purchase of aircraft beginning with the Sh21billion rights issue that will cater for deposits for its first Dreamliners set to be delivered over 2013/2014.


Boeing requires deposits for planes to be made 24-month ahead of delivery time.


Government and KLM have committed to taking up their rights amounting to 49 per cent while institutional investors are also said to have expressed strong interest. 


A successful rights issue will also shore up the airline's balance sheet allowing it to leverage it for borrowing from banks.


The airline is also said to be set to launch a regional airline, Jambo Jet, which will cater to a changing market that now features an increasing number of travelling businessmen as opposed to the tourists who have previously formed the bulk of its business regionally.


A cargo business has also been started as the airline seeks to capitalize on the flow of goods from the Far East into the African continent as well as Jomo Kenyatta International Airport's emergence as the busiest cargo airport in Africa after surpassing Cairo and Johannesburg.


KQ for those who know it has a simple business plan. It uses its regional flights to bring passengers from all over the continent and loads them onto long haul jets that take it to far flung destinations like Bangkok, Gouangzhou and the like. It then does the reverse bringing in travellers from around the globe and putting them in 737s and Embraers that take them into African capitals.


The airline plans to build the most extensive network on the continent making it the undisputed leader and use Dreamliners to take them to any part of the world.


For instance when its workers went on strike some time back, operations in West Africa, Nigeria, Cote D'Ivoire and the like were severely disrupted given KQ's grip on international air travel in the region.


Titus Naikuni is known for his biting remarks and sarcastic wit particularly when shooting down reporters' questions when he feels they are ill-informed or ambigous.


One time a reporter asked him when Pride Center, its training and simulation facility would open yet it was already operational.


"Pride Center is already open, in fact it is old, it needs paint."


Naikuni, 59, sits on several boards including Maersk Kenya, AccessKenya, East Africa Portland Cement and Magadi Soda.


One thing he was yet to do was to reform the corporate culture at the airline. Like Safaricom and KCB, some feel it is now time for a major restructuring of the airline to streamline the way it does business and align its personnel skills to better support its growth strategy.

KDN, TELKOM KENYA, KPLC CABLE CUTS DOWN INTERNET IN KENYA

Fiber cables

A road contractor has cut underground fiber cables belonging to Kenya Data Networks and Telkom Kenya near Jomvu seriously affecting internet services in Kenya. To make matters worse, KPLC dark fiber that many ISPs and telecoms use between Nairobi and Mombasa was also cut near Mombasa when alleged scrap metal vultures vandalized a pylon.

The result is that internet services have been intermittent as carriers scramble to seek alternative routes.

Currently, big carriers like Safaricom are relying on the government-owned National Optic Fiber Internet Backbone (NOFBI).

Telkom Kenya has already reportedly come back on line and KDN is said to have told clients it expects to be back up in about two hours time.

Players have renewed their calls for a bill imposing stiff penalties on vandals and careless road contractors who cut crucial infrastructure like telecommunication and power lines.

As soon as it is passed, telcos are said to be waiting to swoop down on contractors with a vengeance.

The disruption comes at a time when the country's outbound traffic is being channelled through Seacom because TEAMS was cut by a ship's anchor at the coast and is undergoing repair while Eassy is being repaired for a cut near Djibouti.

Also said to be affected was the Reuters Currency Dealing System at local banks which crippled trade with the Shilling exchanging at around 82.40 to the dollar.

Some banks reported downtime on their ATMs.

MOBICOM MEN WIN CMC BATTLE: MUTHOKA KICKED OUT

Peter Muthoka and Bill Lay

For Peter Muthoka, high noon came at 11am, at the CMC Industrial Area premises boardroom. At last it appears, the threat by Paul Ndung'u, the chairman of Mobicom, that he would finish Muthoka had come to pass. By 12 noon Monday 12, 2012, Muthoka had finally been kicked out of the CMC board.

When it came down to it, the Andy Forwarders man found only John Kivai in his corner. His last remaining ally, Richard Kemoli, balked just before the board meeting was called to order.

In case you've not been following it, CMC has been involved in bitter boardroom wrangles that kicked off with a coup early last year that jettisoned CEO Martin Forsters (40-years at the helm) and long-serving chairman Jeremiah Kiereini carried out by newly muscled shareholders Peter Muthoka and his allies Paul Ndungu and Joel Kibe.

Months down the line, Muthoka was himself toppled in another boardroom coup and replaced by Joel Kibe, CEO of Mobicom.

Since then, allegations and counterallegations, boardroom and courtroom drama galore and sensational revelations of impropriety, kickbacks, corruption and secret offshore accounts have dominated CMCs coverage in the press.

Its share is suspended from trading on the NSE and authorities had ordered the constitution of a new interim board with an independent chairman.

On Monday, the board met to nominate the new interim board.

Word has it that Kemoli, who also chairs the Bamburi Cement board, was told in no uncertain terms outside the boardroom that his neck was also on the chopping block - he could either resign gracefully, or be thrown out in the bloodbath that was to follow. The votes were already marshalled, and the die was cast.

Significant is that in the grand scheme of things, Charles Njonjo (whose business interests typically revolved around the triumvirate of Njonjo, Jeremiah Kiereini and PK Jani) now chose to ally himself with the Mobicom men, Paul Ndung'u and Joel Kibe, as they made their final assault to take over the ailing auto-dealer.

Till then, Kiereini, and by extension Njonjo, were thought to be in Muthoka's corner. Ashok Shah, the supremo at APA Insurance (now Apollo Group), was seen as a wildcard and in the event that Muthoka had managed to call the extra-ordinary general meeting he had attempted to last year, Shah would have been the one to tip scales in Muthoka's favour.

Muthoka at that time wanted Billy Lay, current MD, Andy Hamilton, Paul Ndung'u and Joel Kibe voted out of the board and in their place three new members including one Mark ole Karbolo (currently embattled chairman of East Africa Portland Cement - Are all these guys embroiled in drama?) appointed.

That move was defeated through the courts and the Capital Markets Authority.

During a series of meetings held between CMC and CMA, on February 11 and 12, it was agreed that a new interim board of three Capital Markets Authority-appointed directors and seven CMC nominated directors would be constituted.

CMA appointed Susan Wakhungu of Human Performance Dynamics - she was involved in the restructuring of Safaricom into the current Safaricom 2.0, Zehranabu Janmohammed - of Archer and Wilcock Advocates and wife to TPS Serena boss Mahmud Janmohammed (she also sits on the Standard Group Board). Also appointed was Dr. Joshua Okumbe, CEO Centre for Corporate Governance.

THE COUP

When it came to the CMC side of the bargain, Muthoka miscalculated. First, he thought he would have Kemoli in his corner bringing his votes to three. Then in the agenda, he expected that the three CMA appointed directors would join in in the selection of the seven CMC side directors.

But Bill Lay and his side had other ideas. They decided to start with the nomination of the directors first meaning the current 10 directors of CMC would vote. Kemoli was first axed when he was appraised of the situation and hastily scribbled a note on a piece of paper to the board announcing his resignation.

Going into the meeting, a list that excluded Muthoka and his partner at Andy Forwarders, John Kivai, was proposed.

Ashok Shah of APA seconded it. The matter was put to vote and Muthoka and Kivai lost 7-2.

They stormed out with Muthoka threatening that it was not over yet and he would see them in court.

ANALYSIS

At the end of the day, if Muthoka knew what was good for him, he should have quit this battle a long time ago and walked away with the hundreds of millions he has made from CMC.

He however bet wrong. His trump card was that along with Johnstone Muthama, they are the main financiers of Kalonzo Musyoka's quest to become president.

But hoping to become president and being a sitting president are worlds apart.

You see, Muthoka was indirectly fighting a sitting president. 

Paul Ndungu and Joel Kibe, are business associates, some say frontmen, for Jimmy Kibaki and by extension the first family's business interests.

At every turn, Muthoka has pulled seemingly spine-bending blows to his adversaries, the tide has inevitably turned.

INVESTIGATIONS

With regard to three off-shore accounts, the CID and the UK Serious Fraud Office (SFO) are investigating. Likely to come under their cross hairs are the Jaguar and Nissan Diesel Brands which are said to have been paying kickbacks into these accounts.

JG Kiereini, the late PK Jani, and Charles Njonjo, former CEO Martin Forster and the late former company secretary of CMC will also be in the spotlight.

Muthoka's case will now be investigated by the CMA to ascertain his culpability in CMCs lost billions.

THE BIG ONE: SAFARICOM PUTS GINA DIN PR ACCOUNT INTO PLAY

Gina Din Kariuki, Managing Director, GDCC

Gina Din CC decade-long grip on possibly the most lucrative public relations account in the country is under threat after Safaricom decided to open it up to bids this month.

Not only will the reported Sh7-8million retainer-per-month contract be floated but apparently it will be broken up EABL style with possibly different firms handling different publicity roles like corporate, Safaricom foundation, events etc.

PR firms in town are currently filling out the forms to pitch for the lucrative contracts next month as the telecoms giant continues to shake up the way it does business.

GDCC is said to be preparing its pitch with stiff competition expected to come from the likes of Ogilvy, Africa Practice, Tell-EM, Hill and Knowlton, Apex, Silver Bullet, Energy Source, Yolanda Tavares and so on.

Ogilvy has lately become the 800-pound gorilla in the room bagging such accounts as KCB and Kenya Airways from GDCC along with the numerous others it runs from Orange to Barclays and so on.

Hill and Knowlton, like Ogilvy now a part of Scangroup, has also snagged LG from GDCC.

The pitch comes at a pivotal time for Safaricom as it will also mark Victoria Kaigai's entry into Safaricom as the Head of Communications at a time when the department has seen the departures of Washington Akumu and Wachira Kang'aru (who left to take up a posting as Business Editor at Daily Nation) as well as Gina Din's seconded staff to the green giant, Cedric Lumiti (who left for Hill and Knowlton) and Soshe Oyalo (events - who is now at Multichoice). Another Gina Din veteran who worked closely with Safaricom in the past, Rodgers Wabito, also left for Hill and Knowlton last year while Francis Ochieng who has lately handled Safaricom's account for Gina Din has also left for Ogilvy.

In other words, the Safaricom communication and external is essentially starting on a clean slate and will probably be one of Nzioka Waita's (Director Corporate, Legal and External Affairs) major tasks as Safaricom 2.0 era completes its first year.

There could be positives and negatives given that much of the institutional memory so to speak is gone particularly as relates to media relations.

Positive is that Safaricom could use this to completely re-orient its communications function and redesign the way it manages communication about itself amongst its various publics.

This could involve developing a PR strategy from scratch designed to fit in and support the new corporate structure and also mainstream new media more fully into this function.

In particular, communications could develop its own vision and mission aligned to the corporate one but more importantly, it may be time to introduce segmented communication given that already the company has stated its intention to carry out segmented and targeted marketing for its different products which may appeal to different demographics.

This will involve having to ask themselves who their audience is and what sort  of communication they relate to and what sort of media they expose themselves to and at what times.

It will not do to have mishaps like the Valentine's day one.

It will also be perhaps a chance to properly position Maryann Michuki's digital and social media section to support the whole organization rather than act as a branch of Customer Support.

Essentially, a few folks should have been trained to do what that section does for Customer Support and left to run their show while Digital Media concentrates on introducing support functionality for other divisions such as Marketing, Events, Corporate Communications, CSR, Investor Relations, CEOs office etc etc.

It will also be time to roll out a social media policy and strategy throughout the corporation so that for example an employee say who happens to be friends with a non-employee on a social media platform like Facebook or Twitter, knows how to answer probing questions or respond to statements without compromising the organization's strategy.

The negative could be the loss of so much institutional memory at once. One of the main reasons GDCC was successful in using ex-reporters was their familiarity with news desks as well as the country's correspondence network.

Anyone can hold an event in Nairobi and get decent press for it but try doing it up country. Some of the newsroom veterans in PR Houses are adept at one trick; having a point man in major towns. This is usually a correspondent who can be relied upon to mobilize journalists for an event, know the police and probably carry out some logistic work on the ground. They are crucial to getting an event off the ground in a place like say a school in Kakamega or Kisumu and getting it coverage in the press.

The other issue is that by working with the company, many of the PR guys already knew Safaricom's products and services well and could do a beyond-the-press-release explanation.

So a new agency will have a steep learning curve although with the movement of personnel around the industry chances are that a person who handled Safaricom before may happen to work for that agency.

With a new HOD Comms who has to show performance and has the pressure to deliver, whichever agency gets any of these contracts will feel the full heat of to perform to unimaginable expectations.

I can bet a million bucks people at an agency will come to dread the sound of Victoria Kaigai at the other end of the line before too long.

That said, is it a good idea to split up the contract?

That is debatable although some companies seem to be going for it with KCB said to be considering it.

While of course it will force each agency to focus on an area and deliver, the question may arise as to singularity of the communications message when different entities handle different aspects of the same organization.

This goes back to Communications: They will have to come up with a full-scale communications strategy within which the functions of these different agencies will have to be aligned. The strategy itself will have to fit within the role of the Division of Corporate, Legal and External Affairs under the Safaricom 2.0 structure meaning the rationale for forming the division in the first place will have to be looked at and the communication strategy aligned with that - the assumption of course is that the division has also defined its role within the Vision and Mission Statement of Safaricom.

EABL which has separate agencies cannot claim to have suffered from it but also cannot say its communication message has been amplified by it.

It took a tepid performance last year for the company to publicly acknowledge it was adversely affected by the so-called Mututho rules when it could have sounded the warning earlier.

Agencies begin to pitch next month.

AIRTEL 3G SERVERS DISABLE CALLS?

Airtel calls could not go through for much of this morning although some calls from other networks and international calls were able to terminate on Airtel. Calling from Airtel however, was another matter.

All signs point the problem to the newly deployed Airtel 3G network.

The reason calls could not be made apparently was because of problems within the Mobile Switching Centre - this is the modern day equivalent of the old telephone switches (PTSN) - which apparently could not route calls properly.

Typically, the (VLR) Visitor Location Register,  a table of active mobile users that have been detected by the network that day, and the Home Location Register (HLR), the database of all Airtel SIM card users should have the same information since the VLR is linked to the switching centre which regularly updates the HLR.

But for some reason, while signalling seems to have been working okay, the forwarding plane which in some networks is a table that has the addresses that the router needs to look up and forward the signal/message to was not.

By around 2PM it seems the problem had largely been dealt with.

That being said, it can only lead to one conclusion: That the problem was occasioned by the deployment of a 3G Core Network when the company announced its 3G rollout.

Because it cannot arbitrarily migrate to 3G when so many Airtel users are on 2G/GSM handsets, Airtel must have decided to support 2G in its 3G core network.

Many Mobile Switching Centres (MSS) allow for implementation of GSM.

Ericsson which is the company involved in this particular case, runs what it calls a MSC_S, from where it runs the control and bearer functionalities of the switching centre.

It is here where it must have implemented support for Airtel's 2G/GSM.

Most likely, this was a configuration issue - growing pains so to speak.

Of concern however is that it is here that also billing functions take place and with such downtimes and general confusion, subscribers who didn't complete calls could have been accidentally billed and others not billed.

KENYA BANKERS DENY WEAKENING SHILLING

KBA chair Etemesi, CBK governor Ndung'u (r)

Kenyan bankers led by Stanchart CEO Richard Etemesi feel MPs who sit on committees like the one investigating the fall of the Kenya shilling should be well versed in such matters. Clearly they don't think the likes of Adan Keynan grasp the dynamics of banking and hence the damaging report they released on last year's free fall of the local currency is not well informed.

Electronic manipulation of the shilling for speculative gain and hoarding were dismissed as implausible.

Etemesi, the chairman of the Kenya Banker's Association, used KBA's 13th floor boardroom at International House to convene fellow industry chiefs to rebut the report which is set to be tabled in parliament tomorrow.

Among other things, the Report on the Decline of the Kenya Shilling, alleges massive upsurge in commercial banks borrowing from the Central Bank of Kenya to cash in on government securities.

It says three things caused the shilling's woes, economic factors and failures of certain human beings and institutions.

It zeroes in on human beings and institutions as more to blame.

Human being number 1 is identified as CBK governor Professor Njuguna Ndungu. The MPs chew him up.

He is accused of being asleep on the job, failure to act in time, and generally having a poor working relationship with commercial banks.

It calls for his sacking and recommends and tribunal to be set up by President Kibaki to investigate the man.

Ndungu and the Monetary Policy Committee are portrayed as toothless and need to be granted legislative spine.

The Bank Supervision Department is said to have failed.

Treasury is said to have failed to act when CBK wilted and is asked to grow a pair and act quickly and decisively in future.

Commercial banks were said to have borrowed money at lower rates from CBK and used it to make money from high interest rate government securities.

The report hits at banks for misbehaviour on the forex markets and calls for stiffer fines (Sh20million or 50 per cent of the value of "irregular" transactions") to be imposed on them.

Etemesi, KCB's Martin Oduor-Otieno, NIC's James Macharia, KBA's Habil Olaka, and the CEOs of I&M and Consolidated Bank took issue with the reports findings.

For starters they said the Sh600billion figure is taken out of context. It was cumulative and not an amount they just borrowed at once.

In any case, they pointed out, CBK's core capital is only Sh5billion therefore it cannot lend out 120 times the equivalent of its capital.

Moreover, the banks themselves have a combined core capital of Sh259billion meaning they cannot be in Sh600billion debt...that would mean they are insolvent.

In any case, Etemesi added, what banks borrow is made against their holdings of government securities.

The borrowing, he said, is overnight and has to be repaid the following day. Therefore, banks could not have borrowed overnight to lend out money for 91-day Treasury Bills.

In any case, the average figures in 2011, showed that while commercial banks borrowed an average of Sh4billion from the CBK Discount Window, they borrowed more, Sh12billion amongst themselves a day on the Interbank market.

That said, the Sh600billion cumulative was still way higher than what they took in 2010.

The bankers said this is because liquidity was tight in 2011 necessitating them to latch onto the discount window.

They ruled out arbitrage on the Discount Window and the Interbank where potentially a bank could borrow from CBK at a low rate and lend on the overnight interbank market at a higher rate.

That is illegal Etemesi said.

On hoarding forex, the bankers said their own customers decided to keep the cash in foreign currencies when they realized the shilling was under pressure.

The report will be tabled in parliament tomorrow.