1. What take over has KK been involved in to justify your outlook?

KK has been expanding regionally, spreads the risks, the margins are possibly better in the other territories.

2. Do you think that the KPRL award will afffect KK's profit?

The matching principle dictates that revenue is matched against the expenses incurred to generate it. The award goes back several years, so I'm not sure whether they will treat the payment to KPRL as a hit in this year or spread it over several years.

3. Recently, KRA has made it almost impossible to obtain an extension of transit product. Do you think that this will drive up the costs and reduce profitability?

I don't understand this comment. Suffice to say KK uses Dar extensively, so the transit cargo restrictions here shouldn't be overly significant.

KK is trading at a discount for precisely the first two reasons you have cited.

I believe KRA is applying the same rule across the board. That being so any costs will be added on to the final product price in Uganda. While this could dampen demand slightly, petroleum demand is fairly inelastic, so Ugandans will just have to grin and bear it.

I feel like a proud father who sees his kids excel...

At times I felt 'alone' in defending KK... but now I am in an enlightened & growing group... Some might call a cult!

Long Story Short... KK will make the believers good money!

@milken, when Ug begin producing, KK will just source from them and not ADNOC or wherever they currently source from. So how can KK lose?

@Gordon Gekko when Ug begin producing, KK will just source from them and not ADNOC or wherever they currently source from. So how can KK lose?

Why KK and other Kenyan companies are able to export to Uganda, Rwanda, DRC etc is because the product most comes from Kenya and foreign companies can not use the Kenyan pipeline. When the equation changes and product comes Ug all the companies in RW, DRC and Burundi will source the products from Ug on their own account.

@mwanahisa
BTW It is illegal to move petroleum products other that Fuel oil by road from Mombasa. Well some companies have exemptions bu the cost (about Kes1.5per litre more) is untenable.

I admit that there are supply challenges within the KPC system, however there has never been a challenge in moving products by road from Nairobi. Hence Kenya will always be better that TZ even with PEV. Segman is giving the shareholders hogwash by saying that product can move by road from TZ to UG. As a matter of fact even for Rwanda the government had to intervene and levy higher taxes on product from Kenya to encourage guys to go to Dar and establish another supply route. With the new budget in June moving petroleum taxes to specific from ad valorem, Rwanda customers have started trooping back to Kenya.

In Burundi, Dar is still advantageous owing to a dubious tax structure that favors product from TZ. (By the way I wonder what our Ministry of Trade does. I tried to meet the Kenyan trade attache to Rwanda over this issue and he was very unhelpful)