Wednesday, January 14, 2009

Why Triton stole and unanswered questions

Having read through the stories in the daily (I think DN has done a very good job so afr on this oil story), one can conclude that:
  1. The loan that KCB is running after is considerably higher than the Ksh2bn that is out there. As DN makes clear today, this was based on a KPC estimate of the import price at Ksh60*126m litres. But remember that prices during this period (and the period seems to be almost 9 months) were alot higher, so its better to use say Ksh90. That means that KCB share of the loan now goes up to Ksh3bn. The questions, given volatile oil prices, how does KCB (1) value its loans (2) keep up with the collateral needs for such loans?
  2. Triton stole the oil because it wanted to create an artificial shortage so that prices would temporarily go up allowing it to make money or breakeven on its omporting prices.
  3. Its still not clear why KPC was not the one importing the oil. Why?
  4. The collateral agreements are not agreements. It is merely a process and one that can easily be breached. A collateral agreement always has a clause that in effect makes you the guarantor. Is KPC (and by extension GoK) the guarantor of these loans?
  5. MTNs-when did they become legal financial instruments in Kenya? Is CMA aware?


coldtusker said...

MainaT: Whatcha smoking?

DN 'investigations' claim fuel shortages coz of hoarding. DN 'investigations' claim there are no fuel shortages in Uganda, Rwanda & S.Sudan.

BUNCH OF LIES... they did not apologise for the faux pas!

1) KCB values the loan based on the amount they lend. Under OTS, the sale price is guaranteed/fixed as long you supply under the OTS rules.

2) The oil is collateral & technically sold the same month at the OTS price. Triton tried to game the system.

3) MTNs are NOT public debt. They are not & should not be in the purview of CMA.

4) KPC is not (& should not be) in the business of importing oil. Their job is to store (coz they were given KOSF) & transport the oil.

bankelele said...

even bigger question was tax paid on the missing oil? If it was sold localy, and no tax was paid, then kenya revenue authority (KRA) may have a superior claim to KCB's debenture

MainaT said...

CT- this has been a developing story and 2ndly, I doubt if the DN journalist covering this story all have the level of financial knowledge you have. Yes, they could have double checked their sources with the oil marketers. MTNs are a tradeable instrument so they have to be regulated.
Banks-when will KCB learn to avoid political loans?

coldtusker said...

MainaT: How does DN claim no fuel shortages in Uganda? Nation Media owns Monitor of Uganda.

MTNs: No, coz no 'public' market. Buyer beware in that you can buy them on the private market. The costs of issuing MTNs would jump considerably. What next? CMA regulates medium term bank loans (similar to MTNs)?

Banks: Yep... could be an issue. BUT KCB is safe in that sue KPC into bankruptcy. Then restructure it and sell it off!

Before the bankruptcy is done... the gov't will pay up!

MainaT said...

CT-In the UK MTNS have to be registered as an instrument.
It turns out they were short-term notes anyway