Major petroleum companies have rebranded as energy companies - Martin Chomba

Added: 2026-05-29

[00:00:00]Even as we have these conversations, the budget is still swirling around our heads and a lot of the conversations around that then the issues that we're going to have to deal with. Two gentlemen join us in the studio today in the hot seat and they are already here.

[00:00:12]Um Moses Dito is the vice president of IMAC. He'll tell you what I in just a minute. Good morning.

[00:00:18]>> Morning. How are you doing?

[00:00:19]>> Good. Good. Good to see you again.

[00:00:20]>> Yes, nice to be here.

[00:00:21]>> Bas that's the day job.

[00:00:26]>> Um let's see what happens at night.

[00:00:31]I don't think you want to know.

[00:00:32]>> No.

[00:00:35]Still too early for the day. Okay. Um, Martin Champa is the chairperson in the Petroleum Outlet Association of Kenya.

[00:00:42]Good morning, Martin.

[00:00:43]>> Good morning.

[00:00:44]>> Don't be nervous when you hear these stories because you and he and I know exactly what we're talking about. I know.

[00:00:48]>> Don't be nervous when you hear these stories of uh uh the the school tragedies.

[00:00:53]>> No, it's unfortunate.

[00:00:54]>> It is very unfortunate.

[00:00:56]>> Uh it it has to be well. Um let's deal with things when we can. We're talking today budget 2026 2027 EVs have been talked we've heard it EVs EVs and folks are like are we talking about somebody called Elyn? No electronic vehicles what we're talking about and we'll get into that and the petroleum industry impact.

[00:01:14]We'll talk about budget but first Dennis will welcome you to today's proverb.

[00:01:17]He'll tell you where we are and we'd love to get your interpretation.

[00:01:19]>> Today we are in the Gambia population of around 2.5 to 2.8 million people. Now the interesting thing about it is they have 600 different species of birds. So if you love birds go to Gambia, enjoy yourself and just listen to the birds chop in the morning. Nairobi where I let you go around then the varistoric dinosaurs, >> right? But then again, one thing that stands out for them is when they go to elections, they don't use the ballot paper. They use Oh, sorry. They not the birds, the people of Gambia.

[00:01:59]>> They use glass marbles to elect their president. So, you just take your marbles and you elect a president. Put them in a tube and that decides who the president is. Affordable for them.

[00:02:07]They've accepted. That's their way of democracy. But let's go to the probe this morning.

[00:02:12]>> Glass marbles like banos.

[00:02:13]>> Yes.

[00:02:14]>> Yes. That one ban.

[00:02:15]>> So, what if I have like 10 bananos? So there's a so there's there's a tube that is written your name. So if you have many of them you become the president.

[00:02:25]>> No no I'm saying me as a voter. How many can you come with is what you're saying.

[00:02:30]>> I'm sure they have mechanism to make sure if you played banter we used to steal the other guys but they >> Yeah. So this is a story for another day.

[00:02:38]>> A story for another day. Yeah. But let's go to the proverb. A disobedient foul obeys in a pot of soup. You know they have bad soul. Yes. A disobedient foul >> obeys in a pot of soup. Job. How would you interpretate it?

[00:02:54]>> Like um we we we we have another proverb that speaks to the same and it says that um uh they they used to advise people in those days because they are they were forester that don't use this route.

[00:03:11]>> Mhm. But they would say if you don't as a person that does not listen or hear >> the advice of not where to pass will certainly hear the crunching of the bones by because of the hyenas that will be eating >> their legs.

[00:03:34]So it's it's it's basically that if you don't obey and now you'll certainly have to obey later but you'll be in a in a circumstance that will make sure that you you don't negotiate whether you want to obey or not >> or not. Yes. Moses how you interpret it.

[00:03:50]>> Yeah. I he takes me back to my methal in the 80s which we had to cram and I remember that one they used to threaten us but I would also say if you're not if you've got some bad that's just rogue >> it can make a good meal.

[00:04:14]Do you understood those proverbs that interpretation?

[00:04:27]>> All right. All right. So, in the finance bill, of course, we've heard and seen uh quite a lot um about uh electronic vehicles, EVs is what been shortened to um and that whether it's a way to uh reduce issues around combustion when we talk about climate and environment or if it's a way to then avoid expensive petrol or diesel. Um but then when we're looking at the finance bill 2026 2027, this has come up. Uh so, first of all, let's let you tell us what EMAC is. uh um and and try to understand that from that point of view.

[00:05:00]>> Well um Electric Mobility Association of Kenya is yes which is EMAC is um uh is a member uh organization and what we tend to do is we do a lot of advocacy >> for adoption and uh and of electric vehicles. M so we started 3 years ago mainly because whenever we would try and engage authorities or government they would say don't come as an individual don't come as a company we don't make regulations we don't make for an individual company and it's a young industry so around um 44 companies uh heading to 50 now and a few individuals who are interested in the electric vehicle space um from the vehicles all the way to the charging infrastructure to carbon credits have come together and uh it's a growing organization and then try then and um be the voice of um uh of the industry. Uh so we basically advocate for the industry uh adoption, we do a bit of education, we do all that kind of stuff.

[00:05:59]>> Yeah.

[00:05:59]>> Okay. So electric vehicles have shown up in the budget in the finance bill >> quite some from what you have been able to understand. Dto what is going on here?

[00:06:11]We've been in we've been in this uh corridors of finance bill >> uh from day one. This is the fourth year that electric vehicles have shown up. Um so I think the idea is uh if we speak about specifically for this year is we had got some incentives a few years ago uh where um where some of the components especially if you're doing local assembly you would get um we were um we were zero rated uh for uh electric bicycles, motorcycles and electric buses and then um and then there's no uh the uh so and that has helped the adoption you've seen in the last 3 years. Yeah.

[00:06:50]>> However, what has been the biggest challenge for the industry is every year we fight for an incentive and the following year we are told it's going to be uh removed. So this year the proposal is not a full removal is moving us from zero rated to exempt >> which has of course an effect especially for those who are doing um local assembly. So if I am buying um if I'm building a motorcycle and there are certain parts I am buying locally uh that I cannot then claim that input VAT which of course I will pass on that cost to the final user. Uh same thing with the people doing the buses or the bicycles. then that means it becomes a disincentive or then on the other hand I would say then why why am I buying the local inputs but if I brought them fully if I brought those if I brought let's say seats uh from China as part of the CKD kit I will not pay for it. So I think for me it's um um I was talking to my colleague here earlier as we were waiting is it's yes we it's it's an electric vehicles are an opportunity but it is not the switch that solves all the problems. That's it's not that this is a young industry. It's a young industry that needs to grow and get to a point whereby it actually we are in a position to start um being a solution. Right now we are literally a baby that's not working. We are crawling as an industry.

[00:08:13]>> Yeah.

[00:08:13]>> Yeah. Very young industry. Cho.

[00:08:15]>> Yeah.

[00:08:16]>> We look at um EVs in the market and I'm going to look at it in different perspective. Right. So where we find ourselves today especially in the fuel crisis that that that we are in is because the demand for fuel is high.

[00:08:28]Why? Because that is what is pushing um the transport sector um moving of goods moving of people from one point to the other. Now EVs comes in as a solution to the demand because if we buy say 1 million um liters of of of of diesel for example but we have EVs that are being used to f people from point A to point B they demand for diesel will go down because they don't use diesel. So that diesel that we're talking about will then be used for other sectors that need it right now. When we see these um in the finance bill, additional taxes going into the EV sector, that means it's going to be expensive to manufacture, expensive for Moni to purchase. That means we'll still go back to our traditional way of importing uh fossil fuel powered vehicles, which then adds on the pressure. Are we seeing that being a disservice to the to what we're trying to solve fuel crisis in the country? Thank you. Thank you very much.

[00:09:36]Allow me first of all to start by um an indictment to the people who make policies and especially around taxation in the country.

[00:09:47]>> And as DTO has rightly put it, the fact that today you lobby for something, you're given next year it is taken away through the finance bill is one of the uh economic disincentives that we've been talking about. um what you call unreliable, unpredictable taxation regimes because you remember um when people are looking to put up a business, you're looking at um your break even time um and you're looking at the return on your investment and when you're doing the postulations when you're sitting down to do um to focus on how you'll you'll do your business, you're looking at maybe five 6 7 10 years. And there has to be a predictability that allows you now to really strategize. But when you think that every every every year there will be a change of taxes and laws and all that then you you are not able to even arrange your finances or um pro project uh how your business is going to be. So that's an indictment. Uh the people who are doing the they are doing taxes and they have an interest to grow the industries in Kenya. First of all, we must appreciate that we need to have a predictable tax regime so that if I put up a business today, I know in the next 5 10 years, uh this is going to be the tax regime. Having said that um when you look at um uh the the the impact of the EVs in the country uh within the the space of uh both um mobility >> versus uh the fuel that we use we we we say that petroleum is a is um especially diesel is a production oil is a production fuel and so there's a lot of competition in terms of uh the industries and motor vehicles and all that and and the space of EV uh we don't from where I see it we don't see and the industry has long accepted and if you want to know that we have accepted EVs you'll see that every major petroleum company has rebranded yes >> from petroleum >> to energies >> energy >> there's a reason because if you look at look at any company that you know they are no longer so and so petroleum so and so petroleum they are so and so energies because we izing and we appreciate that we are changing the society is changing so is the business topography uh the economic outlook is changing why today with the growth of EV with the growth of solar with the growth of um solar energy and wind power we have not seen a decrease in the use of fossil fuel >> we have not seen that why the economies are expanding >> Mhm. and they expanding. Like he said, the growth in the EV sector in the country is not where it ought to be.

[00:12:43]Yes, it is coming, but it's not gotten to a place where we would see that it is threatening the use of diesel.

[00:12:49]>> No, no, no, no. Far from it. Neither is solar or uh wind power. So, they are becoming complimentary sources of energy for the economy. And so for us where we are we also changing our petrol stations the outlets that we have we are play we are now putting them as energy centers >> where the if you're looking to swap the battery that is where the the electric motor vehicle motorcycles will come and swap those batteries. So for us we are not threatened. We are actually building now in investing in uh um making our infrastructure robust such that if you need to charge >> you don't need to go anywhere else. So and because we have an existing infrastructure they may not need to reinvest in another infrastructure that looks at charging and all that. So we can we are just complimenting one another. So there is no uh clash from where we sit and from development um economic development study if you look at it you realize that each part is needed. Why today even if we had 10,000 EVs in the country the first question >> if we had 100,000 EVs in the in this country or a million one the first question you need to ask yourself have we developed our energy sources >> to a level that we can charge these vehicles uh effectively so it is not uh one thing because it's I see people look at EV like you can just import a million vehicles and they have taken over. Now there are a lot of other industry that must be developed amongst them the energy sources because they they will now compete with the little energy that we have and uh today the beauty about the EVs you they are charging at night >> the few cars that we have. So when uh what our energy ministry has been talking about we lose a lot of power at night because there's no uptake. So it is becoming a complimenting uh issue where they will charge now they will be able to uptake that energy during the day they are driving a charge. So when he's charging then uh we are not using energy during the day the energy is being used by other industries and it's complimenting.

[00:15:08]So if we look at all of this in relation to I mean the atmosphere but then we want to say pointedly at the budget >> is that again uh electronic vehicles now with the suggestion in the finance bill is that they'll be zero rated meaning they're not subject to tax.

[00:15:25]>> That's what that's what we've heard right now that's what we are moving away that's for local assembly.

[00:15:31]>> That's for local an imported vehicle.

[00:15:33]>> So for an imported vehicle it does the the tax still is applicable. Yes.

[00:15:38]>> So, it's neither here nor there. And we also know that they're a more expensive option uh than other vehicles.

[00:15:45]>> So, why if that were the case for locally assembled vehicles? What's the position for locally assembled vehicles of an electronic nature in Kenya? Are they is it is it a bing is it a bing um system process or is it well established? Is there support for it?

[00:16:04]Because my question is how would you apply a tax? Because this is kind of like an incentive. Zero rated on locally assembled electronic vehicles is almost like a benefit.

[00:16:16]>> But if you don't have the requisite infrastructure, it's almost like selling ice to an Eskimo. I already have it. What? Why are you giving it? What how is it helping anyone?

[00:16:28]>> I think there's two ways to look at it.

[00:16:30]The reason why the incentive was given was to encourage the growth.

[00:16:34]>> So we are talking about 3 or 4 years ago having 700 vehicles in country and when I say vehicles I mean motorcycles, tractor, bus, everything, every category we had less than we had less than a thousand 4 years ago. Today we are above 40,000 and that's growing majority of that being motorcycles. Now locally uh in country we already had a very robust um assembly of uh motorcycles the ICE ones the internal combustion engine. So of course there is as you then asking for this new industry to be given incentive there is competition pressures for those who are already uh providing.

[00:17:11]So you there was a almost trying to level the same uh get the same um incentives that the guys doing ICE were.

[00:17:18]But then for to make EVs slightly give them just that bit more benefit is where they were given that that VAT zero rating and that has been the only benefit that they have above ICE. And the reason how we justify that is an electric vehicle often is is uh either two times if not three times more expensive than the ICE counterpart and you and that's it's a case of technology. EVs have been in the world at least I would say that mainstream in the last 10 15 years. ICE vehicles have been there from um labs in the 80s. So there is a cost of technology. Now anybody who's then getting into EV has the additional problem of building infrastructure. So if I set up um uh an electric motorcycle or bicycle or even bus or even if I decide to do electric pro boxes in Kenya, >> I can't just sell the vehicles. I have to think about when I sell it to you where are you going to charge. So either I have to sell you char you charge at home. So I have to sell you the charger.

[00:18:20]You may need to do some upgrades in your home or I must do public charging. So >> Cha petrol station >> I agree but Cha is not going to invest that money until he sees a sizable amount otherwise because he's these guys are real is not going to say okay that's great in Dorito you're bringing in 10 vehicles okay let me set up a charging station and a petrol station he's not going to have >> no he's have to make business he's setting himself up for when >> I am a regular customer of his so he's ready so when I am when there's that vehicle but when you're talking about 35,000 vehicle in the entire country >> it's a drop. So this is an industry that if we are saying that yes if we look at the environmental conditions we look at energy independence especially with a huge cailment we have 8 800 gatt hours of power that we we actually pay for it but we don't use it >> now all your border guys who are doing your deliveries what are they doing between 10 and 5 a.m. they could be that's when they're charging those batteries have been charging all the buses uh the 100 or so buses that are operating in Nairobi they are charging so it becomes if it your personal car it will be charging so it actually starts helping uptake that curtailment that we are paying for right now that ends up in our bills that we don't but if we then can accelerate that 10fold >> we then can start being affecting now the things that we're talking about what the matu industry is saying if you've got a thousand vehicles it will not affect Nairobi because Nairobi is 20,000 matus.

[00:19:52]Okay. But when you start making you've got 10%. If when the motorcycles start hitting at least 10% 20% you may then start putting that pressure talking where that energy mix starts changing and it needs not to be a Nairobi affair.

[00:20:04]It needs to be a countrywide affair. But right now what we've been doing is we're doing this start stop. We agree this this year and people plan for it and we've shown we are showing government look from less than a,000 to 40,000 in 3 years that shows you there's growth there's uptake there's acceptance but if then I don't know what regime I will be under what what fiscal regime I'll be under next year every year my investment when I'm looking for investment I'm always jittery I'm not sure >> yeah so we you know >> because when when you talk about it like that then I look at the EV sector not just as vehicles on the road. M >> I look at it from a bigger business perspective where if we >> if we left the taxation regime the way it was right then that would mean we would see more units that are coming up >> which would then force the government to start thinking all right saw we have more vehicles that are coming in in due course we will be consuming the energy that is idle and perhaps we need to start investing even more on projects that will provide the country with more power to sustain all this because technology and development is something the Ethiopians built a huge dam. They realized we have more power than we can use. What did they do? They said ban ICE vehicles for their country. That made sense to them because they have more power they can use. Now they've got a few hundred,000 EVs and that's growing.

[00:21:32]So what are they doing? They've got they've got two problems in the fuel sector. They don't have foreign exchange to import and when they import it's not enough. But they have abandoned power.

[00:21:42]So they're now changing that dynamic.

[00:21:44]But again, it's not a switch. It doesn't happen overnight. So it's happening slowly. So it has to be a 10-year plan.

[00:21:50]It's not a one-year plan that we It's not this finance bill cycle of and and I say the finance bill is a is literally an 8 year, it's an 8 month cycle.

[00:21:59]Because when you pass it on 1st of July, assuming I'm investing by the time I import units or uh kits to start assembling, I will be giving those to customers if I'm lucky in November.

[00:22:11]>> November.

[00:22:11]>> Okay. So I have November, December up to around April to do business. Then I start thinking what are they going to do this year? Will I import? I wait. So with that and with with the changes that we see in in in the finance bill and the opportunities that do exist that means you as a business mind who's waiting for enough units for you to set up charging stations you equally can't put in money in that sector because you don't know maybe next year while we imported a thousand this year maybe in the coming year we'll import 20 because it is expensive for you and doesn't make any commercial sense. So essentially we're shooting ourselves in the leg. Yes, we you you see the biggest problem that we have in the country I'll tell you is um a governance issue and governance from a perspective of uh um differentiating between um businesses and I it is true we live in a political economy but we must be prudent enough to appreciate that there are spaces that cannot be politicized. there are species that cannot be left to the whims of uh politicians. I am an aspiring politicians but I'm politician but I'm alive to the fact that at some point there's um the people we call the technocrats in the government the the the permanent government those people who are in charge of policy those people who have developed um these systems over time to manage the way the economy works. And when it comes to the issues of making sure that the economy is persistent and it is predictable in terms of growth then we have a duty and we don't have the luxury of looking at it from the eyes of um who is in power today or what will happen tomorrow. If we do that we are we are dead. I told you the way I look at the development of EV I look it at it as um a piece of a jigsaw puzzle >> that is the economic development outlook of the country because they are plugging in to a space where as they go today we have 40 around give or take 40,000 units in the country it is we've not started to feel the effect of the power issue and actually we may need to develop them to about probably 400,000 units. So to effectively or to get near to an effective uptake of the power that we lose at night and we pay for. So when we get to a place where we'll be talking about a million uh EV vehicles in this country, then an emergency an emergence of a new uh growth in terms of the need to supply power now comes up. So we may look at the alternative sources of uh power and we may want to have people and industries setting up power production business and that now plays into the big to the larger economy that comes with so many other infrastructural uh development because if at my station now I require a charging space >> and I'm putting up that charging space it will require to be manned by people so that will be unemployment. Today I told you we have about 6,200 petrol stations across the country. If we transition all those into energy centers, they will require to have probably another five people in every uh station to man these power stations. So employment issue now also is getting gets also sorted in a way. So there are a lot of inputs and there are a lot of other things that support the the power charging space that now requires other industries to feed into it. And so as I say it's a whole um economic outlook if you look at it. So EV just plays um like a jigsaw parcel and they just come to complement what is happening around the energy industry and the mobility industry. It people should not see it as a competition. People should see it from the perspective of the economic growth that whatever is happening it's it's they adding up into our GDP. That's how I look at it.

[00:26:25]>> There seems to be appetite to have this option in the Kenyan economy. What with the president talking about you know what tax exemption for the first 100,000 vehicles that we brought into the country and and you know looking at tax incentives across board. So there seems to be an appetite for it. Now can you have an appetite without having the infrastructure that is required set up whether it's brick and mortar infrastructure or if it's the basic understanding of what needs to be done I guess that's for both of you >> I think the in go to any EV conference you'll hear that story of the chicken and the egg but but I'll put it this way uh 25 years ago when we started mobile uh the mobile phones came the infrastructure was not there uh for us who are who are old enough to remember Friday all calls would just it would jam >> jam Nameless it says that it would normal as uptake continued that infrastructure grew and got to a point whereby it's went even above the uptake of the vehicles. Today we take it for granted that we have internet for example coverage of internet across uh across the country because of because of those decisions we made. So therefore, if if I know as an investor that we've got a tax holiday on electric vehicles for the next 3 years, so what then what do I do?

[00:27:49]I start planning on how are those vehicles going to charge either through uh fast charging in petrol stations and in other areas uh yourselves here at Standard Group, you've got huge parking.

[00:27:59]I've seen solar you could actually put and your staff members could actually charge using uh renewable sources here locally. So you start planning for it.

[00:28:06]the government starts planning where is the next generation and and the one thing that's very beautiful about Kenya is the fact that we using renewable sources of energy to charge what would have been uh what would have been seen as a replacing what would have seen as a dirty fuel so there's a very great opportunity for us in this region in especially especially in Africa but we have to plan for it it cannot be year on year that this year we say so let's bring the 100,000 the moment that is signed into law and God I hope and we pray that we will see it in the amendment of the finance bill and the East African uh community this time. If we see it and that happens, I can tell you his members are going to start looking at investing and now it's not just the charger. You have to do power upgrades because you might not have enough power at that petrol station.

[00:28:52]That is Kenya power has to upgrade the power that is money being left here that could have gone out. Now I I say that for for us we we count how many liters of diesel we um we uh replace. Now if I buy an EV do if you buy an EV for the rest of your life as long as that vehicle is on the road you'll be using locally generated power the vehicles we're doing we are using right now >> are subject to straight of home use for the rest of their lives. So we have to ask ourselves what is our competitive advantage. EV gives us an opportunity but it's not a replacement because all the vehicles that we have the 4 million motorcycles tractors combine harvesters plant all those vehicles will the currently in the country will continue using fewer >> motors. Let me just remain on you a little bit. Um so when you talk about EVs it's >> again it's bigger than what we think about because we also get into the climate discourse right because with the amount of EVs that we have in the country then that is subject for even carbon credits we can we can take that to international committee and say because we have a thousand vehicles on the road we've been able to remove x amount of fossil fuels um in the air and we are worth this much >> with these taxes getting in that means it is expensive that means units that coming into the country will be fewer Kenyans getting into that spaceache that means also in the entire conversation of carbon credits the the tonnage amount also goes down so essentially Kenya stops being the darling of the world when it comes to matters climate change and being a leader to being someone who's passed a law that goes against those policies I don't know what to add to that. That's exactly where we are. So here we are in a country that uses renewable energy.

[00:30:47]We're not burning a coal to power power to power our vehicles. We are actually using geothermal. We're using wind.

[00:30:54]We're using solar. We're using hydro.

[00:30:56]>> So the marginal the the amount of carbon you're sequestering just by one vehicle is higher than anywhere else in the world.

[00:31:06]That's the that's the challenge South Africa has because they're burning coal to power vehicle. So you've literally what you've reduced is very little.

[00:31:14]Yeah. On one hand you're burning coal which is a big pollutant and then you say I'm driving clean. Here you you're getting clean energy and driving a clean vehicle. And then we can even take it maybe when we talk about carbon credits it passes people.

[00:31:28]>> Assuming you're in Mombasa hospital >> you only you unfortunately have been admitted there. You think there's a there's there are bees outside >> because of all those tuk tuks making that noise. Imagine what how would the patients quality be if we turned those into electric.

[00:31:45]>> Noise goes away. It's already happening.

[00:31:48]An electric tuk tuk will enter a beach hotel and pick you at reception but not the fuel ones. There are certain things the noise in town the suit around just that the particulate matter around uh Kencom area if we could just even just go 30% of those vehicles being clean vehicles it changes how we operate even health benefits one of our biggest challenges in health is respiratory and you can connect that directly to tailpipe emissions >> cha >> yeah this is this is an opportunity then that you would also get to be um a a carbon credits player, you know, because you set up business, you are charging electrically and u with everything there. You not only get value by charging uh per per hour in terms of someone charging, but you also get to qualify for a carbon credits um recipient of of the same. with this finance bill. Then one asks the question is it that we do not critically look at what it is we are putting into this finance bill that denies us opportunity to grow as a country. All you're concerned about is political expediency.

[00:33:07]You see um you know you know where you are drawing me to now is >> you're the one who said you are an aspiring politician. It it is a space that is um you know yesterday I was driving with somebody and they asked me a political question and that has to do with finance bill and all that and I remember telling them now as I get older I'm starting to appreciate the wisdom of the person that who's the person that said that ignorance is bliss >> because when you don't know some of these things they don't bother you and you're okay. Unfortunately, we have a disjointed government uh infrastructure.

[00:33:48]An infrastructure that I'll give you an example that one department of government does not know what the other department is doing and these departments are in the same ministry.

[00:33:58]>> Yeah.

[00:33:59]>> And so when everyone is giving their budget proposal or they giving their tax proposals, they are giving them in an antagonistic way. So you are recommending this within say we are in the energy we are in the ministry of energy and petroleum but you see the people dealing with petroleum are giving this and then the guys dealing with um the geother power generation are giving this and whatever they giving is antagonizing each other within the same ministry you'll you'll see when it uh I'll give you a very simple um example we have struggled at some point with um within petroleum we have them we have devolution isn't it we have uh places we have uh this county this county this county and the ministry of transport and the ministry of petroleum and k are all government uh ministries so you'll find that when you're transporting petroleum from Nairobi and you are in Nairobi and you're going to Kimu you pay a certain distribution tax in Kimu in for petroleum then the same vehicle is is headed to Muranga and then to Nakuru or and into all these places you're going paying distribution taxes of a petroleum uh product that is uh regulated by EPRA in terms of all the prudent cost that are supposed to be input costs in uh distribution of petroleum but the the the the council of governors or the devolution department does not feed EPRA with these costs that these people are paying elsewhere. So you'll find that what Apra has given and what is required at for petition petroleum distribution is conflicting. It is the same thing that we are having now within where we are today. petroleum and uh EVs there should be clear guideline that guides how we develop other uh say for instance we need to have a clear carbon credit trading guidelines and from there that is where now we that that is what should inform the policy directives that now cascades down to how we develop the EV how we develop the petroleum because of that guiding principle Today what we have is kneej >> reactions.

[00:36:21]If this industry is making noise, tell them this, give them this. M >> for instance um I appreciate the president saying that um the the 100,000 vehicles EV vehicles that we are we are we are bringing in but now he will tell you um and he knows this is true >> uh the the the customs at that level is not just a Kenyan issue isn't it it's an East African thing >> so unless this thing is legislated upon um it would just remain in a story >> and you cannot bring in vehicles to Mombasa and tell the K there was a presidential directive that I should not be you you you you get the problem. So unless it is legislated upon it becomes an issue. And for me what I would wish that we do to grow this industry is what we did with the mobile telephone he was talking about or the digital uh space the bringing in the digital equipment away from the analog. We money has a way of following value.

[00:37:30]>> You create value money follows investment follows. So when people see value and value comes in terms of policy directives that are solid predictable that if I'm coming to invest $100 million in this country and I'm from coming from outside there I know that for the next 10 years there's not going to be a tax regime that will or a physical space that will I'll be told look here uh the things have changed now you have to do this you have to do this and that is that is what is uh investment and the growth of businesses in the country.

[00:38:06]>> So you're saying that the add something you are aware?

[00:38:09]>> Yes. Let me tell you investors aware they tell you you oscillate between what is right and what is wrong. You you don't have a space you know we cannot place you anywhere.

[00:38:20]>> You know sometimes we talk we talk here and we sound we we sound quite clever but let's take it down. I have a client real I'm looking at his figures.

[00:38:29]>> Fuel went up by 35%.

[00:38:31]>> Yeah. drives a they have it's a mat >> okay but they only increased fair by 10%. M >> okay so he's absorbing >> 20% but by using the EV he's making 30% more because the cost even just to take out everything else you just look at cost of energy where he spends 10,800 shillings on his matu every day in diesel the equivalent um the equivalent of electric is 3,000 bob >> what is he doing with 3,000 bob in this electric vehicle >> just that's what the cost of charging the cost of charging >> okay so So when you take it to that level, when the Buddha guy who rides that bicycle and brings you your KFC or brings you your kafu, whatever product you've ordered, >> his cost is much lower when he's using an electric bicycle or electric motorcycle.

[00:39:22]>> Okay, let's if I'm sorry we said we are talking. Okay, >> how much is this electric motor cycle?

[00:39:30]>> So what has happened in the motorcycle industry? Very beautiful thing has happened over the last 3 years. when it started motorcycles were double the price of an ICE. What have these guys done?

[00:39:40]>> They have segregated the battery from the motorcycle. So the motorcycles in some cases with some companies is cheaper than ice. But what then then what you do is you swap. So you don't own the battery, you own the motorcycle just like you don't own the gas cylinder in your house. It's not yours. You've just rented it. You it's it's an energy receptacle. You take it back. They fill it up for you. That's what battery swapping is. So you go, you take your battery, you get another fully charged one and you continue and that is the cost when you look at that cost. If you were to count it per kilometer, that's much lower. Now that's what's going on in the motorcycle industry and that's a mature industry. But why is it working?

[00:40:21]>> But how much is it DTO >> in terms of to swap?

[00:40:24]>> No, to buy the thing in the first place to buy the bike.

[00:40:27]>> It's on the high side it's around 150,000. There are people who are below 100,000 today >> and to buy an ICE we're looking about 100,000 >> around the same >> around the same price.

[00:40:36]>> Okay.

[00:40:37]>> So that's happened because that's growing. If you come to a personal vehicle >> we we are a country that imports used vehicles. Nobody wants an used EV.

[00:40:48]>> If I look around here of you has a 3year-old phone. People want but to buy a new vehicle to buy a 2023 2024 vehicle I'm not even talking about 2026. the tax hits you go because very hard because we we our tax um the way we've set up our tax is we punish people who want newer technology technology >> so you telling me as a Kenyan I wait until that EV is used in >> 8 years >> 8 years now where is a source market Japan Japan is not big on EVs >> it's not been so you only have to get our only source is UK then you have to deal with the sterling pound which is very expensive so used EVs is not even a >> an option >> an option China used to buy for you. So the cards are already um tipped against >> tipped against you. So >> when you're thinking about the policy, you must also think about where are these vehicles going to come from?

[00:41:47]>> So when the president talks about this tax-free thing of 100,000 vehicles, where are they coming from? These vehicles will come from China but they will not come next week because investors must now be say if that is legislated now the OEMs will go and say okay there's a market in Kenya let's build the vehicles let's is there charging that becomes a long-term that's why it's not a switch this is a plan you plan for 5 years you plan for 10 years yes that's Norwegian is over we change the tax regime >> and remember we only import 100,000 vehicles in the country in a given year.

[00:42:26]So it's not saying if it's given on the 1st of July, >> are we saying that every every imported vehicle in Kenya will be EV?

[00:42:35]>> No.

[00:42:36]>> Where from?

[00:42:36]>> I'm asking the question. So you >> I'm asking the question.

[00:42:40]>> Yes.

[00:42:42]in our tax regime seems as if >> we are kneejacking and reacting on all these issues >> other than staying visionary >> in the long term. Let me let me give you an example.

[00:42:56]>> Today we talk about China being the leader in terms of absorption and manufacturing of EVs. It's not the United States, it is China. Why?

[00:43:06]>> Because China started with the manufacturing of batteries. They understand the technology and they are good at it because today when you talk about batteries from China >> they you would take around 20 minutes full capacity charge because they are good at that technology.

[00:43:21]>> Over the years protectionist um decisions and policy because of the vision they had in changing the country to lower the emissions in the country they decided to go EV.

[00:43:32]It is a vision that they've stayed with for over 10 years with the same policies throughout. In Kenya today, we come up with a good policy. We do not look at the vision in terms of 10 20 years.

[00:43:45]We're looking at it in 8 months >> because we have a finance bill that we need to fund. How does that affect the entire energy sector in moving forward both in terms of technology in terms of growth and making sense in the 21st century?

[00:44:02]>> We we agreed and I agree with Dito that we bring the conversation to the level that the common person easily understands and this is how I look at our tax regime.

[00:44:12]>> Our tax regime is akin to a very hungry person.

[00:44:17]the decision they make is not uh for posterity >> is for what can I eat now >> what is available now so our tax regime we do not um uh organize our tax around economic growth >> it's among around collection our incentive is where can we collect money now >> whether that industry will survive >> or die >> or die is a known issue because we have a pressing need. You you see when you you have you seen yourself in town and you are in this the middle of Nairobi and you've not eaten the whole day and you are struggling between the 50 bob whether you can eat kiddogo or you can walk kiddogo. If you live in Kangi your mind now start telling you I can I can actually eat 30 bob. I walk to wastelands and use the 10 bob to to go to the next place. that that is in that decision is not informed by anything other than the the pans the PS you're feeling and so that is our tax um organization we organize our taxes >> hey you're too kind I would have said it's the opposite you need to go you need to go you need to go somewhere and >> so there's not even a emergency >> once now you're full is when you realize that this distance I cannot manage to walk.

[00:45:47]So then we start making frantic calls to borrow >> to borrow to borrow. It is basically what we are doing for food.

[00:45:54]>> Yeah. This is basically what we are doing. And so we are finding ourselves in a in a place where those of us who sit down and wait for policies that we will inform growth of the country now are also akin to a vehicle that is raving. It has everything okay but there is not the gear is not engaging.

[00:46:20]>> Yeah. you know so they always like they go but they're not going nobody's engaging the gear and that is how the businessmen in this country are they all really if you ask any business person today they have a plan they have a plan to grow everybody has a plan to grow but there needs to have somebody who the clutch is already pressed in the clutch is pressed in but nobody's engaging the gear >> so and how do you engage the gear because we're bringing that conversation down.

[00:46:52]>> We are bring we are talking about engaging the G. We want to see you see the the like we had an education center the sector that grew up in this country in unprecedented manner that around East Africa region we are the best in terms of growing the education sector especially the private schools and all that because there was a a regime that looked at appreciating education. So whether it was president Moy every time was talking about education whether when Kbaki came in the regime was free primary education and so it was all hands on deck everybody knew if this is the policy guiding the country I will not go wrong by investing in education we need the same thing what do we have a predictable uh growth strategy or are we becoming like the business people that you've seen those guys who say and they look at today is going to China. So I go to China then I come back. I don't know what happens in China. I I want to do what is being done in Nairobi. I'm doing the other thing. You there's nothing that you're doing that is predictable.

[00:47:56]But it's because it's a fish rods from the head. So if our government policy makers >> he's going to come there >> give us a consistency way of looking at policies and taxation then I am telling you everybody else will start because they know if I take this road I'll surely get to Mombasa but >> and and tomorrow another place.

[00:48:22]>> Yes. And diversions every day there's a diversion and those diversions are going nowhere. So and and this is why we must do it as a matter of policy to delink political rhetoric >> and the business environment.

[00:48:36]>> Well said >> to make it very clear I think then was one of the you know points of this conversation to now understand exactly where we are. So when you hear EVs shouting all over the place at 100,000 you say hey >> this is exactly what it means. And if you don't have the structure and if you don't then have the incent the real incentive then you're actually building on sand.

[00:48:57]>> You see what the president said the other day.

[00:49:00]>> Uh look at it from this point. So to to manufacture EVs 100,000 EVs to bring into the they are not seated somewhere to be brought into the country. So somebody in China will have to look at that directive and they will start investing because Kenya needs them. But then again, this person will tell the people that do research for them, wait a minute, look at how consistent are these people. So they'll tell you, no, no, no, no. Last year the tax regime was different. The other year was different.

[00:49:29]So it follows that it's likely to be different. So we cannot invest in this because of Kenya.

[00:49:35]>> So if we then plan this is what and I think we're going back to where we started. If if that's if we want 100,000. Okay, let's say I like the idea maybe it's a good idea and it's a good step. Now what is the plan after the 100,000? So if you want to continue enjoying those incentives, you must bring part of that value chain >> to Kenya. So that I know that maybe 100,000 takes us 3 years from year four for me to continue enjoying duties, fiscal incentives. Year four, I must do maybe some sort of assembly in Kenya, I must now becomes clear. He then now knows that in this year there will be an increase of 50%. So I can set up on the other side. Kenjen is now thinking okay with this with this uptake of power we need to be >> generation and then and then we connect.

[00:50:24]The way we feel is we talk to transport they aligned they are disciples we go to energy part of it they aligned >> h we go to environment I don't know then treasury comes they've not been in the room and they see there and you sit there and you start again and you do this the following year and the following year >> makes it clear but time doesn't allow us to go further but this has been very clear in terms of where we actually need to go Mosen Dorito is the EMAC vice president joined by Martin Chamber today the chairman of the petroleum outlet association of Kenya gentlemen Thank you both of you for being here. Hopefully that we can get some consistency, but it has to be deliberate. Asantana for keeping it in the situation room this morning. Good morning.

[00:51:02]>> This is the situation room. The only way to start your