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Kenya opts to go it alone in setting up fertiliser factory

Discussion in 'Kenyan News and Politics' started by nomasana, Jan 29, 2011.

  1. n

    nomasana JF-Expert Member

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    Kenya has decided to go it alone in setting up a fertiliser production plant in the face of a frustratingly slow approval process in East African Community partner states Uganda and Tanzania that had been approached to participate in a joint venture.


    The government plans a feasibility study on the plant’s viability in the next two months at a cost Sh70 million. The study is expected to be completed by June.

    Experts have warned that such a project would be very expensive for the country to undertake on its own.


    Agriculture permanent secretary Dr Romano Kiome confirmed the feasibility study would go ahead, adding the government has held discussions with Uganda and Tanzania and development partners.


    Reliable sources who spoke to the Sunday Nation on condition of anonymity because of the sensitive nature of the matter, also said the government has been consulting international fertiliser producers and financiers about the possibility of setting up such a plant.


    “The feasibility study will determine the way forward. We decided to initiate the project as a government after the other countries in the region were slow in responding to our initiative. The others can join later,” said a source in government not authorised to speak to the media.


    The idea to building the factory is not new. When reading the 2008 Budget then Finance minister Amos Kimunya said Kenya was consulting with Uganda and Tanzania on the funding and location of a regional fertiliser production plant.

    “We are in consultation with Uganda and Tanzania on setting up a regional fertiliser factory to ensure long term sustainable (fertiliser) supplies,” Mr Kimunya said.

    If the project takes off, it would be the third time Kenya has tried to set up such a factory. The most controversial attempt was a 1975 initiative in which the government entered into a joint venture with N-Ren, an American firm, to set up KenRen Chemical and Fertilisers Ltd.


    KenRen was to manufacture fertiliser for domestic and export markets.

    It signed financing agreements with Austrian and Belgian banks and suppliers, with the Kenya government as guarantor.

    The suppliers were Coppee Lavalin of Belgium and Voest Alpine of Austria. They never delivered any equipment “except for some crates whose contents were not verified.”


    Three years later, the project collapsed, and KenRen went under. The government, as a guarantor, became responsible for the debts which have been the subject of investigations and heated debates in Parliament.

    read more: Daily Nation: - Business News |Kenya opts to go it alone in setting up fertiliser factory
     
  2. G

    Geza Ulole JF-Expert Member

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    it would have looked awkward if Tanzania with huge confirmed reserves of natural gas would have teamed up with Kenya to put up a fertilizer factory in Nairobi while it can do it alone and supply a final product there! It is like accepting to use a refinery at Mombasa instead of constructing one in Uganda and one in Tanzania; countries with proven reserves of oil and gas respectively! Economics makes sense to have such facilities at a country with resources as affordability, job creation and revenues are concerned!
     
  3. n

    nomasana JF-Expert Member

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    huh???

    maybe i missed your point but what do gas and oil got to do with fertilizer???
     
  4. G

    Geza Ulole JF-Expert Member

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    go back to school to see what's the use of natural gas in fertilizer making! as for oil i just gave you an example how unrealistic are your proposals with elements of me first than economical feasibility on the ground
     
  5. n

    nomasana JF-Expert Member

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    you still dont make sense but goodluck with the gas and fertilizer thing.
     
  6. G

    Geza Ulole JF-Expert Member

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    you must be out of this World not to understand what i mean! In short your government approached Tanzania Government to refine its gas in Mombasa and it seems the GOT refused since Ophir is currently putting up facilities in the Southern Coast of Tanzania! The same thing your government tried with Uganda! Tullow wanted to expand the Mombasa facility for Uganda to refine its crude oil but the GOU refused and currently they are putting up a refinery with a capacity of 200,000 barrel per day in Kampala! If you don't understand my explanations then you will have to go to school and if the explanations don't make sense to you then something is wrong with your head!
     
  7. n

    nomasana JF-Expert Member

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    ok...........so????
     
  8. Bantugbro

    Bantugbro JF-Expert Member

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    'Natural gas' is a key raw material used in the production of fertilizer....:msela:
     
  9. G

    Geza Ulole JF-Expert Member

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    i thought you are a smart person but now i doubt maana hata hujui natural gas kama inatumika kutengeneza fertilizer! BTW i only tried to give you an economic reason why the GOT did not respond on Kenya's invitation! i thought you have been boasting that you are educated enough to understand issues....ama?
     
  10. eliakeem

    eliakeem JF-Expert Member

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    That is so technical to nomasana. He's a lay man on hydrocarbons economic thing. Slow down bro and try to educate him, though I doubt if he'll catch up.
     
  11. Smatta

    Smatta JF-Expert Member

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    Great minds discuss issues not people
     
  12. eliakeem

    eliakeem JF-Expert Member

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    Karibu smata, where have u been.
     
  13. G

    Geza Ulole JF-Expert Member

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    but for the case of ur friend issues don't make a sense to him, i have surrendered my case since i tried to explain to him but i failed he is as hard as a coconut to understand relevant issues... i wonder how did he manage school !?
     
  14. N

    Namtih58 JF-Expert Member

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    Totally agree with you on that point, but let us look at it from the Kenyan side. It makes sense for GOK to have a factory on its side since like it has been stated kenya consumes more fertilizer than the rest of EA. hence has the bigger market.
    If there is one thing I give to the GOK is that when it decides it does its best to make happen. Perfect example the marine fiber cables, GOK went it alone now kenyans have three cables to choose from. Not to mention the Kenyan one arrived way earlier.

    Secondly Kenya has had an oil refinery for as long as I can remember. GOK did not build it because Kenya had oil, It made economic sense. They can buy crude oil cheaper than they can petrol, secondly GOK gets the extra advantage of producing all other related products not just petrol, such as Diesel, oil, bitumen, kerosene etc products they would have had to purchase individually. Besides natural gas is only needed if your primary method of producing nitrogen is by using ammonia, there are other methods they maybe looking at.

    Lets hope GOT does not go the Nigerian way (export crude, import fuel), like you said it would be sad. But on the same note let no EA country (Any country for that matter) hold back doing what is good for its citizenry because of any other country.
     
  15. G

    Geza Ulole JF-Expert Member

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    With Economics of scale it makes more sense if a sort of specialization takes place cause the idea behind Common market is to have access to the so 140 mio. citizens of the EA! What Kenya does is a protectionism sort of, if whole based on the fact that "they consume more then they should open a fertilizer factory"! Do Economics work like that? the answer is NAY as we will later see that.. it will be more cheaper for a country with rawmaterials to export a final product to a bigger market than a country (Kenya) with no raw materials but aiming to import them, produce and export fertilizer (a final product) just cause has a bigger market! that's crayz and greedy and defeats the whole idea of Economic regional intergration! Kenya's refinery plus fertilizer factory won't survive in a free competition that excludes all the tarrifs and non tarrifs barriers as suggested by the Common Market regulations! The issue of TEAMs was a smart and sustainable move but not always the case for each project! Just to give you an example the Tamoil EA guys planned to extend a pipeline from Eldoret to kampala but the project had to go back to the draw boards again and device a means to reverse the flow direction after the discovery of waxy crude oil and plan to put up a refinery in UG despite the existence of a refinery in Mombasa that is afterall old, underperforming to meet the current and envisaged rise in demand!
     
  16. N

    Namtih58 JF-Expert Member

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    I agree with your assessment in terms of economies of scale, where we part ways is whether it makes sense for Kenya to build the factory or not.
    Look at it from the GOK perspective. Its citizens are in need of a product which it can only provide by importing, right now and in the foreseeable future that product's cost when it reaches the citizenry is economically NOT viable. So whats a government to do.

    -Partner with neighbors --taking too long to reach a consensus. Its citizens are nugging

    -Wait for a neighbor to start producing the product in the near future. --uncertainty

    -Provide subsidies for citizenry --Not viable would go against agreements the government has signed with other in the trade block

    -Go it yourself NOW with the risk that in the future the factories might not be viable -- Citizenry appeased, employment opportunities for the citizenry for now looks like the BETTER OPTION from a government's perspective

    Of course there is a lot more that comes into play but the above illustrates my point. When you look at it from a governments perspective whose mandate is first and foremost to take care of its citizenry (Not always in our neck of the woods) then some choices that might look selfish or nonsensical to others actually make sense.
     
  17. n

    nomasana JF-Expert Member

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    "slow down and try to educate him......:coffee:
     
  18. G

    Geza Ulole JF-Expert Member

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    New fertilizer factory in offing
    From DAILY NEWS Reporters in Dodoma, 18th February 2011 @ 11:13, Total Comments: 0, Hits: 516

    THE government is planning to set a new mega fertilizer factory in the country to double the provision of the product to farmers.

    Deputy Minister for Agriculture and Co-operatives Christopher Chiza told the National Assembly on Friday that already the government had consulted various private companies including Polyserve, Deepack, Helm and Tanzomin to set up the factory.

    Mr Chiza said the recently launched programme by President Jakaya Kikwete in which more fertilizer would be imported into the country by YARA Company would enable reliable distribution of products to farmers.

    He said the company was currently constructing a warehouse with the capacity to store some 40,000 tonnes.

    In his response to a basic question by Mr Zambi, who had demanded to know whether the government had plans to double agricultural inputs such as fertilizer and quality seeds, Mr Chiza said that it was the government's commitment to ensure the provision of agricultural inputs was improved.

    He said in 2010/2011 through its voucher system programme, the government was implementing its programme to provide subsidized agricultural inputs and had so far disbursed 200,000 tonnes of fertilizer and 20,000 tonnes of quality seeds aimed to reach at least 2,000,000 maize and rice farmers countrywide.

    He said the programme's aim was to improve their farming products. Mr Chiza further said that the government had also provided subsidized fertilizer and cotton drugs worth 8bn/- to farmers during this farming season.

    He further said that the government would continue expanding the Minjingu Phosphate Fertilizer factory in Manyara to improve services to farmers. Meanwhile, the government had insisted that the Minjingu phosphate fertilizer was natural and sufficient to improve farming produce.

    Mr Chiza said on Friday that Minjingu fertilizer was reliable but said the government would continue looking into ways of improving its quality to give better results to farmers.

    The deputy minister made the comment when responding to a supplementary question by Godfrey Zambi (Mbozi East- CCM), who said the fertilizer was ineffective and had adversely affected farmers in his constituency.
    Daily News | New fertilizer factory in offing


    Foreign company ready to invest 3trl/- for projects in Tanzania
    By DAILY NEWS Reporter, 26th February 2011 @ 12:00, Total Comments: 0, Hits: 504

    WENTWORTH Resources Limited has expressed its intention to invest in Tanzania, by establishing a fertilizer plant and production of methanol.

    This plan was revealed yesterday by the company's Board Chairman Mr Bob McBean when he met and held talks with President Jakaya Kikwete in Dar es Salaam's state house.

    Members of the Board told the president that the company was ready to invest 2b USD (about 3trl/-) in major economic projects and that last week the company held a successful meeting to raise such money.

    The company has bought Artumas company and will produce methanol and fertilizer (urea) using natural gas from Mtwara.

    The company will have headquarters in Dar es Salaam. The company's delegation also told President Kikwete that in the next 18 months it planned to drill new gas wells in order to ensure availability of enough gas for developing such projects.

    They noted that Tanzania was in a good position to make major and quick development like Qatar due to huge gas deposits discovered in Mtwara, Lindi and Coast regions.
    http://www.dailynews.co.tz/home/?n=17634&cat=home
     
  19. Akwaba

    Akwaba Senior Member

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    Since we are talking about fertilizers you should all know that over time fertilizer kills the soil. Once you use fertilizers you can't grow anything without fertilizers again. Basically the farmers are suckered into having to use if unless the learn to re-establish the soils natural organisms. As a side note the UNEP found that fertilizers provided no benefit over proper organic farming in East Africa.

    DO chemical based fertilizer kill off organic soil goodies? - Grasscity.com Forums

    The interactions between these organisms form a web of life, just like the web that biologists study above ground. What most people don't realize is that the above ground world wouldn't exist without below ground systems in place and functioning. Soil biology is understudied, compared to life above ground, yet it is important for the health of gardens, pastures, lawns, shrub lands, and forests. If garden soil is healthy, there will be high numbers of bacteria and bacterial-feeding organisms, which means the beneficial, disease-suppressive organisms will be present. If the soil has received heavy treatments of pesticides, chemical fertilizers, soil fungicides or fumigants that kill these organisms, the tiny critters die, or the balance between the pathogens and beneficial organisms is upset, allowing the opportunist, disease-causing organisms to become problems.

    Overuse of chemical fertilizers and pesticides have effects on soil organisms that are similar to over-using antibiotics. When we consider human use of antibiotics, these chemicals seemed a panacea at first, because they could control disease. But with continued use, resistant organisms developed, and the organisms that compete with the disease-causing organisms were lost. We found that antibiotics couldn't be used willy-nilly, that they must be used only when necessary, and that some effort must be made to replace the normal human-digestive system bacteria killed by the antibiotics.

    Soils are similar, in that plants grown in soil where competing organisms have been knocked back with chemicals are more susceptible to disease-causing organisms. If the numbers of bacteria, fungi, protozoa, nematodes and arthropods are lower than they should be for a particular soil type, the soil's "digestive system" doesn't work properly. Decomposition will be low, nutrients will not be retained in the soil, and will not be cycled properly. Ultimately, nutrients will be lost through the groundwater or through erosion because organisms aren't present to hold the soil together.

    The best way manage for a healthy microbial ecosystem is to routinely apply organic material. To keep garden soil healthy, the amount of organic matter added must be equal to what the bacteria and fungi use each year.

    Indiscriminate use of chemical fertilizers and pesticides should be avoided. If the soil is healthy for the type of vegetation desired, there should be no reason to use pesticides, or fertilizers. If a decision is made to change from grass to garden, or forest to lawn, a massive change in the soil foodweb structure is required but all that is needed is addition of the right kind of compost with the right kinds of organisms to do that conversion. Once the correct soil foodweb structure is in place, there should be no reason to apply chemicals.

    If both bacteria and fungi are lost, then the soil degrades. If bacteria are killed through pesticide or chemical applications, and especially if certain extremely important bacteria like nitrogen-fixing bacteria or nitrifying bacteria are killed, the wrong kinds of bacteria, or too much fungal biomass can result (often seen in tropical soils!) can take over and crop production can be harmed. For example, current research indicates that the reason moss takes over in lawn ecosystems is because the soil is converted from a bacterial dominated system to one dominated by fungi. Or the soil may become saturated with water because of poor soil structure during heavy downpours, and the iron in the soil is reduced into plant unavailable forms. Without the right biology present, reduced iron cannot be taken up by grass, and weeds flourish.

    Without the right biology present, nutrients are lost, erosion increases and plant yield is reduced. If inorganic fertilizers are used to replace the lost nitrogen, the immediate effect may be to improve plant growth. However, as time goes on, it is clear that inorganic fertilizers can't replace the other kinds of food that bacteria and fungi need and may damage soil through accumulation of salts. After a while, fertilizer additions are a waste of money, because there aren't enough soil organisms to hold on to the nutrients added. Surface and groundwater will become contaminated with the lost nutrients, causing problems.
     
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