Covid joke no 25

Meria

Meria

Elder Lister
Kenya is set to build a $5 billion (Sh540 billion) nuclear power plant on a site in Tana River County over the next seven years with funding from private investors.
The Kenya Nuclear Electricity Board (KNEB) in a regulatory filing with the National Environment Management Authority (Nema) revealed that the plant with an initial capacity of 1,000 megawatt (Mw) plant would be constructed through a concessionaire.
The government looks to expand the plant’s capacity fourfold by 2035 under a build, operate and transfer (BOT) model.
The KNEB plan will be subjected to public scrutiny before the environmental watchdog can approve it and pave the way for the project to continue.
Kenya views nuclear power both as a long-term solution to high fuel costs — incurred during times of drought when diesel generators are used — and an effective way to cut carbon emissions from the power generating sector. The KNEB said private funding for the nuclear plant would ease the burden on Kenya’s strained public coffers. The estimated cost of the nuclear plant is nearly half the government’s annual tax collections.
  • Slow growth likely to dim Sh1trn nuclear energy plan
“The financing aspect of the Nuclear Power Plant is among the plans underway with a Build Operate Transfer (BOT) being the most preferred financing agreement with the concessionaire that shall come on board,” the agency says in plans submitted to the environmental watchdog.
The agency said Tana River is the most preferred location since it is not prone to earthquakes. Other sites under consideration were in the Lake Victoria and Lake Turkana basins.
The proposed sites are endowed with large water masses, which are crucial in cooling nuke reactors.
The project would involve the building of a ‘third-generation’ plant with pressurised water reactors. Nuclear reactors require reliable sources of water for steam condensation, service water, emergency core cooling system and other functions.
South Africa is the only country in Africa with a nuclear power plant near Cape Town.
Kenya’s energy mix currently consists of geothermal (45 per cent), hydropower (28 per cent), wind (13 per cent) and expensive diesel-run generators (11 per cent) according to the Economic Survey.
Experts say that hydropower, despite being the cheapest, is weather-dependent, making it unreliable during drought, hence the need for alternative base loads like nuclear that runs for long and uninterrupted.
The nuclear plant would be Kenya’s biggest and most expensive project since the Chinese-built standard gauge railway. The KNEB has running memoranda of understanding with China, Russia, South Korea and Slovakia for capacity building for the nuclear plant.
The nuclear agency wants the State to fend off risks of graft associated with similar mega projects when it is implemented.

Any compromise on implementation standards for the nuclear power plant would also be a hazard, adds the agency.
“Kenya is at a risk due to the expected investment of Sh500 billion ($5 billion) into the Nuclear Power Plant if the current issues of run-away corruption are not curtailed, which may lead to massive public economic loss due to possible implementation delays and overruns as experienced in other mega projects in the country,” says the agency.
“The vice has the potential of exposing the country to national safety and security risks.”
As well as a nuclear plant, President Uhuru Kenyatta’s administration has talked of building solar and wind energy facilities in the coming three years to increase power generation from 2,712 megawatts.
Additional cheaper electricity for industrialists is meant to boost economic growth.
 
We are one of the global leaders in geothermal energy output, we can't even exhaust our hydro potential but we wanna risk it with nuclear power even as the World moves away from it.
Saa ingine nyinyi huwa mnakaa chini, mnajishika rúthea na kujiuliza kwani tulikosea Mungu wapi?
 
Mwalimu-G said:
The other day you villified Keter for saying you should stop using electric power for only lightiing, charging your phone and ironing your shirt.
Click to expand...
Surely Ticha, were we wrong to vilify him? Yaani you expected us to cheer him for telling us to run down our tokens faster and pay through our nose? If we're not consuming enough, then they better reduce production by whatever means. Waanze na kuzima hizo private generators za vigogo.

Do you use electric cooker kupika ama gas kwako?
 
Budspencer said:
then they better reduce production by whatever mean
Click to expand...
This is where the irony is. The less we consume the more expensive it becomes per unit.

Budspencer said:
Waanze na kuzima hizo private generators za vigogo.
Click to expand...
I agree with you that some very poor decisions (fueled by greed/corruption) were made in the past.
And, no, like every sensible Kenyan I don't dare use the electric parts of the cooker. The cost is prohibitive.
 
It's Me Scumbag said:
Your two statements....
Click to expand...
The whole picture, Sir,

I have been trying to explain this concept...

Explaining Natural Monopoly
  • Levels: A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC
Print page
Share:
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In this study note we explore the key concept of natural monopoly.
What is a natural monopoly?
For a natural monopoly the long-run average cost curve (LRAC) falls continuously over a large range of output. The result may be that there is only room in a market for one firm to fully exploit the economies of scale that are available and therefore achieve productive efficiency.
Examples of industries that might fit the definition of a natural monopoly
There are several interpretations of what a natural monopoly us
  1. It occurs when one large business can supply the entire market at a lower price than two or more smaller ones
  2. A natural monopoly is a situation in which there cannot be more than one efficient provider of a good. In this situation, competition might actually increase costs and prices
  3. It is an industry where the minimum efficient scale is a large share of market demand such there is room for only one firm to fully exploit all of the available internal economies of scale
  4. An industry where the long run average cost curve falls continuously as output expands
  5. Private utilities are natural monopolies in local markets
The key point is that a natural monopoly is characterized by increasing returns to scale at all levels of output – thus the long run cost per unit (LRAC) will drift lower as production expands. LRAC is falling because long run marginal cost is below LRAC. This can be illustrated in the diagram below. There may be room only for one supplier to reach the minimum efficient scale and achieve productive efficiency.
natural_monopoly_analysis.jpg
Natural monopoly analysis diagram
Because there is no single definition of a natural monopoly, none of the examples below are purely national monopolies – their cost structure does take them close to a common-sense interpretation:
  1. British Telecom building and maintaining the UK telecommunications network for the broadband industry – especially the 'final mile' copper wiring from the local exchanges to each household
  2. The Royal Mail's postal distribution network – collection / sorting / delivery
  3. Camelot operating the UK lottery
  4. National Rail owning, maintaining and leasing out the UK rail network
  5. National Grid owns and operates the National Grid high-voltage electricity transmission network in England and Wales. Since 2005 it also operates the electricity transmission network in Scotland. Owns and operates the gas transmission network (from terminals to distributors)
  6. London Underground, Tyne and Wear Metro, Manchester Tram Network
Key point:
  • A natural monopoly does not mean that there is only one business operating in the market
  • There may be many smaller businesses operating profitably in smaller 'niche' segments of a market (however that is defined)
  • With a natural monopoly the economies of scale available to the largest firms mean that there is a tendency for one business to cominate the market in the long run
Possible conflicts between efficiency and economic welfare
  • It is often said that a natural monopoly raises difficult questions for competition policy because
  • On the one hand – it is more productively efficient for there to be one dominant provider of a national infrastructure e.g. a rail network or electricity generating system
  • Natural monopolies require enormous investment spending to maintain and improve the networks
  • Businesses monopoly power (huge barriers to entry) might be tempted to exploit that power by raising prices and making huge supernormal profits – damaging consumer welfare
The profit-maximizing price is P1 at an output of Q1. Price is well above the marginal cost of supply and high supernormal profits are made – but output is high too and there is still a sizeable amount of consumer surplus because of the internal economies of scale that have brought down the unit cost for all consumers. (We are ignoring the possibility of price discrimination here).
natural_monopoly_efficiency.png

Options for competition policy in industries that resemble a natural monopoly
Nationalization: Bringing some of these industries into state ownership
Network Rail is a not-for-profit business (formerly Railtrack plc) – nationalized in 2001
National Air Traffic Services – Owned by the UK government (49%); The Airline Group (42%) which is a consortium of British Airways, BMI, easy Jet, Monarch Airlines, Thomas Cook Airlines, Thomsonfly and Virgin Atlantic; BAA (4%); and NATS employees (5%).
Price controls by the regulatory agencies
For many utilities, the government introduced industry regulators to oversee these businesses when they were privatized in the 1980s and early 1990s
For many years utility businesses were subject to price capping– most of these have now finished although some remain
  1. Fines for anti-competitive behaviour: In 2008 the Microsoft computer software company was fined €1.68 billion by the EU Competition Commission for pre-installing its browser, Internet Explorer, on computers running the Windows operating system. In December 2009, Microsoft agreed to allow consumers to choose their web browser on setup. Removing the pre-installation of the software will mean that more firms will be able to enter the market.
  2. Introducing competition into the industry -this has been a favoured policy. This means separating out infrastructure from the final service to the consumer e.g.
  • British Telecom was eventually forced to open-up local telecom exchanges and allow rivals to install equipment ('unbundling the local loop') – who then sell services such as broadband to households – competitors pay BT an access charge designed to give BT a 10% rate of return from running the network.
  • BAA: In 2009 the UK Competition Commission required British Airports Authority to sell off three of its seven airports, starting with Gatwick and then Stansted
  • National Rail runs the network – but train-operating companies have to bid for the franchise to run passenger services – and the industry regulator can take their franchise away if the quality of service isn't good enough. The government took the East Coast line into public ownership in July 2009 following the financial problems facing National Express.
  • Camelot has successfully bid to operate the National Lottery until 2017
 
Last edited:
Mwalimu-G said:
The whole picture, Sir,

I have been trying to explain this concept...

Explaining Natural Monopoly
  • Levels: A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC
Print page
Share:
Share on FacebookShare on TwitterShare on LinkedinShare on GoogleShare by email
In this study note we explore the key concept of natural monopoly.
What is a natural monopoly?
For a natural monopoly the long-run average cost curve (LRAC) falls continuously over a large range of output. The result may be that there is only room in a market for one firm to fully exploit the economies of scale that are available and therefore achieve productive efficiency.
natural_monopoly_examples.jpg
Examples of industries that might fit the definition of a natural monopoly
There are several interpretations of what a natural monopoly us
  1. It occurs when one large business can supply the entire market at a lower price than two or more smaller ones
  2. A natural monopoly is a situation in which there cannot be more than one efficient provider of a good. In this situation, competition might actually increase costs and prices
  3. It is an industry where the minimum efficient scale is a large share of market demand such there is room for only one firm to fully exploit all of the available internal economies of scale
  4. An industry where the long run average cost curve falls continuously as output expands
  5. Private utilities are natural monopolies in local markets
The key point is that a natural monopoly is characterized by increasing returns to scale at all levels of output – thus the long run cost per unit (LRAC) will drift lower as production expands. LRAC is falling because long run marginal cost is below LRAC. This can be illustrated in the diagram below. There may be room only for one supplier to reach the minimum efficient scale and achieve productive efficiency.
natural_monopoly_analysis.jpg
Natural monopoly analysis diagram
Because there is no single definition of a natural monopoly, none of the examples below are purely national monopolies – their cost structure does take them close to a common-sense interpretation:
  1. British Telecom building and maintaining the UK telecommunications network for the broadband industry – especially the 'final mile' copper wiring from the local exchanges to each household
  2. The Royal Mail's postal distribution network – collection / sorting / delivery
  3. Camelot operating the UK lottery
  4. National Rail owning, maintaining and leasing out the UK rail network
  5. National Grid owns and operates the National Grid high-voltage electricity transmission network in England and Wales. Since 2005 it also operates the electricity transmission network in Scotland. Owns and operates the gas transmission network (from terminals to distributors)
  6. London Underground, Tyne and Wear Metro, Manchester Tram Network
Key point:
  • A natural monopoly does not mean that there is only one business operating in the market
  • There may be many smaller businesses operating profitably in smaller 'niche' segments of a market (however that is defined)
  • With a natural monopoly the economies of scale available to the largest firms mean that there is a tendency for one business to cominate the market in the long run
Possible conflicts between efficiency and economic welfare
  • It is often said that a natural monopoly raises difficult questions for competition policy because
  • On the one hand – it is more productively efficient for there to be one dominant provider of a national infrastructure e.g. a rail network or electricity generating system
  • Natural monopolies require enormous investment spending to maintain and improve the networks
  • Businesses monopoly power (huge barriers to entry) might be tempted to exploit that power by raising prices and making huge supernormal profits – damaging consumer welfare
The profit-maximizing price is P1 at an output of Q1. Price is well above the marginal cost of supply and high supernormal profits are made – but output is high too and there is still a sizeable amount of consumer surplus because of the internal economies of scale that have brought down the unit cost for all consumers. (We are ignoring the possibility of price discrimination here).
natural_monopoly_efficiency.png

Options for competition policy in industries that resemble a natural monopoly
Nationalization: Bringing some of these industries into state ownership
Network Rail is a not-for-profit business (formerly Railtrack plc) – nationalized in 2001
National Air Traffic Services – Owned by the UK government (49%); The Airline Group (42%) which is a consortium of British Airways, BMI, easy Jet, Monarch Airlines, Thomas Cook Airlines, Thomsonfly and Virgin Atlantic; BAA (4%); and NATS employees (5%).
Price controls by the regulatory agencies
For many utilities, the government introduced industry regulators to oversee these businesses when they were privatized in the 1980s and early 1990s
For many years utility businesses were subject to price capping– most of these have now finished although some remain
  1. Fines for anti-competitive behaviour: In 2008 the Microsoft computer software company was fined €1.68 billion by the EU Competition Commission for pre-installing its browser, Internet Explorer, on computers running the Windows operating system. In December 2009, Microsoft agreed to allow consumers to choose their web browser on setup. Removing the pre-installation of the software will mean that more firms will be able to enter the market.
  2. Introducing competition into the industry -this has been a favoured policy. This means separating out infrastructure from the final service to the consumer e.g.
  • British Telecom was eventually forced to open-up local telecom exchanges and allow rivals to install equipment ('unbundling the local loop') – who then sell services such as broadband to households – competitors pay BT an access charge designed to give BT a 10% rate of return from running the network.
  • BAA: In 2009 the UK Competition Commission required British Airports Authority to sell off three of its seven airports, starting with Gatwick and then Stansted
  • National Rail runs the network – but train-operating companies have to bid for the franchise to run passenger services – and the industry regulator can take their franchise away if the quality of service isn't good enough. The government took the East Coast line into public ownership in July 2009 following the financial problems facing National Express.
  • Camelot has successfully bid to operate the National Lottery until 2017
Click to expand...
I see...what would be the Kenyan equivalent?
 
Mwalimu-G said:
The whole picture, Sir,

I have been trying to explain this concept...

Explaining Natural Monopoly
  • Levels: A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC
Print page
Share:
Share on FacebookShare on TwitterShare on LinkedinShare on GoogleShare by email
In this study note we explore the key concept of natural monopoly.
What is a natural monopoly?
For a natural monopoly the long-run average cost curve (LRAC) falls continuously over a large range of output. The result may be that there is only room in a market for one firm to fully exploit the economies of scale that are available and therefore achieve productive efficiency.
natural_monopoly_examples.jpg
Examples of industries that might fit the definition of a natural monopoly
There are several interpretations of what a natural monopoly us
  1. It occurs when one large business can supply the entire market at a lower price than two or more smaller ones
  2. A natural monopoly is a situation in which there cannot be more than one efficient provider of a good. In this situation, competition might actually increase costs and prices
  3. It is an industry where the minimum efficient scale is a large share of market demand such there is room for only one firm to fully exploit all of the available internal economies of scale
  4. An industry where the long run average cost curve falls continuously as output expands
  5. Private utilities are natural monopolies in local markets
The key point is that a natural monopoly is characterized by increasing returns to scale at all levels of output – thus the long run cost per unit (LRAC) will drift lower as production expands. LRAC is falling because long run marginal cost is below LRAC. This can be illustrated in the diagram below. There may be room only for one supplier to reach the minimum efficient scale and achieve productive efficiency.
natural_monopoly_analysis.jpg
Natural monopoly analysis diagram
Because there is no single definition of a natural monopoly, none of the examples below are purely national monopolies – their cost structure does take them close to a common-sense interpretation:
  1. British Telecom building and maintaining the UK telecommunications network for the broadband industry – especially the 'final mile' copper wiring from the local exchanges to each household
  2. The Royal Mail's postal distribution network – collection / sorting / delivery
  3. Camelot operating the UK lottery
  4. National Rail owning, maintaining and leasing out the UK rail network
  5. National Grid owns and operates the National Grid high-voltage electricity transmission network in England and Wales. Since 2005 it also operates the electricity transmission network in Scotland. Owns and operates the gas transmission network (from terminals to distributors)
  6. London Underground, Tyne and Wear Metro, Manchester Tram Network
Key point:
  • A natural monopoly does not mean that there is only one business operating in the market
  • There may be many smaller businesses operating profitably in smaller 'niche' segments of a market (however that is defined)
  • With a natural monopoly the economies of scale available to the largest firms mean that there is a tendency for one business to cominate the market in the long run
Possible conflicts between efficiency and economic welfare
  • It is often said that a natural monopoly raises difficult questions for competition policy because
  • On the one hand – it is more productively efficient for there to be one dominant provider of a national infrastructure e.g. a rail network or electricity generating system
  • Natural monopolies require enormous investment spending to maintain and improve the networks
  • Businesses monopoly power (huge barriers to entry) might be tempted to exploit that power by raising prices and making huge supernormal profits – damaging consumer welfare
The profit-maximizing price is P1 at an output of Q1. Price is well above the marginal cost of supply and high supernormal profits are made – but output is high too and there is still a sizeable amount of consumer surplus because of the internal economies of scale that have brought down the unit cost for all consumers. (We are ignoring the possibility of price discrimination here).
natural_monopoly_efficiency.png

Options for competition policy in industries that resemble a natural monopoly
Nationalization: Bringing some of these industries into state ownership
Network Rail is a not-for-profit business (formerly Railtrack plc) – nationalized in 2001
National Air Traffic Services – Owned by the UK government (49%); The Airline Group (42%) which is a consortium of British Airways, BMI, easy Jet, Monarch Airlines, Thomas Cook Airlines, Thomsonfly and Virgin Atlantic; BAA (4%); and NATS employees (5%).
Price controls by the regulatory agencies
For many utilities, the government introduced industry regulators to oversee these businesses when they were privatized in the 1980s and early 1990s
For many years utility businesses were subject to price capping– most of these have now finished although some remain
  1. Fines for anti-competitive behaviour: In 2008 the Microsoft computer software company was fined €1.68 billion by the EU Competition Commission for pre-installing its browser, Internet Explorer, on computers running the Windows operating system. In December 2009, Microsoft agreed to allow consumers to choose their web browser on setup. Removing the pre-installation of the software will mean that more firms will be able to enter the market.
  2. Introducing competition into the industry -this has been a favoured policy. This means separating out infrastructure from the final service to the consumer e.g.
  • British Telecom was eventually forced to open-up local telecom exchanges and allow rivals to install equipment ('unbundling the local loop') – who then sell services such as broadband to households – competitors pay BT an access charge designed to give BT a 10% rate of return from running the network.
  • BAA: In 2009 the UK Competition Commission required British Airports Authority to sell off three of its seven airports, starting with Gatwick and then Stansted
  • National Rail runs the network – but train-operating companies have to bid for the franchise to run passenger services – and the industry regulator can take their franchise away if the quality of service isn't good enough. The government took the East Coast line into public ownership in July 2009 following the financial problems facing National Express.
  • Camelot has successfully bid to operate the National Lottery until 2017
Click to expand...
Can we summarise this as being the basic understanding of what a parastatal was meant to be in Kenya?
 
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