Kenya is planning to add up to nine solar power plants over the next few years via PPPs.

01 Apr 2016 CW Staff

- RA Goenka, Honorary Consul, Republic of Kenya

Kenya is an important trade and investment partner for India. Bilateral trade was $4.235 billion during 2014-15. And India´s exports were worth nearly $4.12 billion. In 2003, RA Goenka was appointed as Honorary Consul of the Republic of Kenya in Mumbai by the Government of Kenya. ¨To represent one´s country is the biggest dream for an individual and a great opportunity to improve further bilateral relation with Kenya and India,¨ he says, while discussing prospects in Kenya in the construction and infrastructure space for Indian companies in conversation with SHRIYAL SETHUMADHAVAN.

What is the current emphasis Kenya places on India as a trade partner?
India and Kenya have growing trade and commercial ties. Bilateral trade amounted to $4.235 billion in 2014-2015, but with Kenyan imports from India accounting for $2.3 billion, the balance of trade was heavily in India's favour. India is Kenya's sixth largest trading partner and the largest exporter to Kenya. Indian exports to Kenya include pharmaceuticals, steel, machinery and automobiles, while Kenyan exports to India are largely primary commodities such as soda ash, vegetables and tea. Indian companies have a significant presence in Kenya with Indian corporates such as the Tata Group, Essar Group, Reliance Industries and Bharti Airtel operating there. Also, Indian firms have invested in telecommunications, petrochemicals and chemicals, floriculture, etc, and have executed engineering contracts in power and other sectors.

What are the investment opportunities for Indian companies in Kenya?
Kenya is expected to fast-track the development of its power infrastructure over the next five years to keep up with electricity demand in the fast-growing East African economy. Generating capacity currently stands at around 1,650 MW, while peak demand is already above 1,400 MW. However, the country is planning to add up to nine solar power plants over the next few years via PPPs. The Kenya Renewable Energy Association is hoping to generate up to half of the country´s electricity from solar installations as soon as 2016, with $500 million already invested in the scheme. Electricity transmitter and distributor Kenya Power is planning to spend $600 million on its distribution network during 2014-16 to strengthen its service delivery to commercial and industrial clients towards the ultimate goal of supporting economic growth. Over the long-term, Kenya is looking to triple its generating capacity to 5,000 MW by 2030. This aim is still attainable, according to Kenya Power. Other notable construction activity is found in ports, railways and mixed-use developments.

India offers development assistance to Kenya in the form of loans and credit. Are there any recent activities or transactions that you would like to share with us?
Development Cooperation India offers development assistance to Kenya in the form of loans and credit. This includes a loan of Rs 50 million to the Government of Kenya in 1982 and Lines of Credit by EXIM Bank to Industrial Development Bank Capital Ltd. There was an agreement on extension of a line of credit of $61.6 million by EXIM Bank of India to the Government of Kenya for utilisation in the power transmission sector. An MoU was signed between the National Small Industries Corporation and Kenya Industrial Estates Ltd.

In 2003, an MoU was signed between India Trade Promotion Organisation and Export Promotion Council of Kenya. Kenya is among the countries planned to be covered by the Pan African e-Network Project that was launched in 2007. An agreement was signed in July 2009 between TCIL and the Kenyan Ministry of Information and Communication regarding the project. Equipment was delivered by TCIL in 2010.

Are there any important projects that both countries are currently collaborating upon or eyeing?
The Sanghi Group is investing over $80 million (Sh 6 billion) in a cement plant that should open at Pokot, an arid area of Kenya, for development. Its local subsidiary Cemtech, with the support of a number of investors, is investing in a 1 million tonne cement factory in Pokot. The Gujarat-based group´s outfit is set to be the second largest producer after Bamburi Cement, which controls over half the Kenyan market. They will invest in renewable clean energy and have invited energy, agribusiness and irrigation investors around the plant.

Just like Sanghi Group, Indian-based conglomerate Mehta Group intends to set up a cement plant in the same area. The group plans to put up a 1.2 million mt cement plant in West Pokot, to cost about $200 million (Sh 15 billion), in a phased programme that will be scaled-up depending on the available limestone deposits in the area. Since last year, Mehta Group, through its cement company Glenn Investments Ltd, has been busy with the groundwork for the project, but analysts point at the intrigues of seeking to invest in the area where Cemtech expects to do its groundbreaking ceremony soon.

As the country reels from a debilitating power shortage, another Indian giant, Danke Electrical Power Group, intends to manufacture and retrofit transformers and electrical equipment. It has already made its application to the Ministry of Energy.

How, in your opinion, can we overcome challenges in our bilateral economic relations?
Economic development needs to be strengthened between India-EAC on a mutual foundation based on indigenous social and economic environment. EAC trade promotion under Article 6 mentions that the Partner States shall initiate trade facilitation by:

Reducing the number and volume of documentation required in respect of trade among the Partner States.
Adopting common standards of trade documentation and procedures within the community where international requirements do not suit the conditions prevailing among the Partner States.
Ensuring adequate coordination and facilitation of trade and transport activities within the Community.
Regularly reviewing the procedures adopted in international trade and transport facilitation with a view to simplifying and adopting them for use by the Partner States.
Collecting and disseminating information on trade and trade documentation.
Promoting the development and adoption of common solutions to problems in trade facilitation among the Partner States.
Establishing joint training programmes on trade.

What is the role played by the governments in strengthening relations between both countries?
Kenya offers an attractive trade destination for India, which is reflected in the number of trade delegations visiting Kenya every year. This year also, Indian delegations are looking forward to their participation in fairs in Kenya being organised by various chambers of commerce and other bodies. Trade delegations from Kenya would also take advantage of several opportunities to visit India.

Under the seventh Joint Trade Committee, both sides have agreed for enhanced cooperation in the fields of bilateral investment, infrastructure, SMEs, agriculture, health, energy, skill development and entrepreneurship, pharmaceuticals and tourism.

The standard-gauge railway currently under construction in Kenya, has the potential to raise the country´s economic growth rate by 1.5 percentage points annually, when finished. The railway line, which is expected to be completed before the end of 2017, will support growth by increasing national and international trade. The first phase of the scheme involves the construction of a 472 km railway line from the coastal town of Mombasa to Nairobi. The next phase will be a 505 km railway line from Nairobi to Malaba on the Kenya-Uganda border. To generate funding for such projects, Kenya has in recent years, sold dedicated infrastructure bonds: During October 2014, the country sold $117 million worth of 12-year bonds. From a regional perspective, integration efforts within the EAC received a significant boost in November 2014 when the World Bank pledged to provide support for infrastructure investment across the region. The multilateral organisation stated that it will loan the EAC some $1.2 billion to improve inland waterways and ports in Kenya and Tanzania, as part of efforts to boost integration in the region. More specifically, the funds will be used to revive inland waterways on Lake Tanganyika and Lake Victoria, and improve handling capacity and efficiency at the Mombasa and Dar e Salaam ports. The EAC, which comprises Kenya, Tanzania, Uganda, Rwanda and Burundi, is undertaking a substantial infrastructure investment programme while deepening policy integration and reducing barriers to trade.

In a recent 2015-25 strategy paper, the bloc stated that it needs at least $68 billion, and possibly up to $100 billion, over the next decade to develop roads, ports, railways, transmission lines and oil and gas infrastructure.