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Monday, November 03, 2008

Return of Big Government?

I am wary of National Oil Corporation of Kenya.

1) Does it receive subsidies from GoK? If yes, how much?
2) Does it receive favourable treatment from KRA?
3) How are its activities funded?

The problem is that any government 'support' costs taxpayers even more.
  • Subsidies means higher taxes on those who pay taxes (MPs excluded).
  • Favored tax status means the other taxpayers are disadvantaged.
  • Capital put into NOCK means other areas are starved OR the funds are borrowed from the money markets.
The government should encourage competition NOT get into the business. NOCK should be sold off to the public & let it compete with Total, Kenol & the rest!

Strenghten regulation and quality controls. Which firm imported the low-quality LPG?

Various taxes on petroleum products should be reduced or eliminated. Or encourage public transport by offering 'free market' incentives e.g. lower taxes on buses & mini-vans.

Government 'support' will encourage cronyism, corruption & inefficiencies!

** Good news: Political clout on the decline. KCB sold off a farm that kenyatta had stolen. They had borrowed money using the farm as collateral & KCB foreclosed on it. Considering (not yet) uhuru is Deputy PM, this is great since other politicians will be running scared!


MainaT said...

Given the cartel-like behaviour of major oil retailers in Kenya, I think its either GoK does price controls or tries to use NOCK for the same.
Clearly, oil price controls would send the wrong message to potential external investors, but I'd prefer it.
I am not sure why the K family feels it has to contest a case like this when it already holds 0.5m acres

bankelele said...

Even with their few stations, NOCK have not proven to be substantialy cheaper in petrol prices. Still they will get some stations as Total will be asked to give some to NOCK to close the deal with Chevron
on a positive note, they got into the coooking gas busienss this year, but prices are still going up

coldtusker said...

mainat: Greed. Anyway, they borrowed the money & didn't pay it back. Well... ta-ta to your assets!

That should apply to ALL Kenyans esp the politicians incl matiba who owes/owed BBK lotsa cash.

banks: NOCK will become a cesspool. I would rather they go public. Private firms are out there to make money. The govt's job is to foster competition.

The 'cheaper' prices we might pay will be wiped out by the corruption & cronyism.

PLUS, how will GoK fund the purchase from Chevron?

odegle said...

i normally pass a NOCK pump on my way to work. i would rather fuel at shell. i have a funny feeling about NOCK. like you, i keep on wondering how they manage to be lower. quality, quantity etc