World air journey restoration will stay weak near-term, says analyst

International air traffic is likely to remain sluggish in the short term as uncertainties about Omicron’s Covid variant persist, according to an aviation analyst.

Brendan Sobie, independent analyst at Sobie Aviation, said omicron has achieved passenger confidence in “travel right now because things are changing every day”.

“The recovery that we hoped would continue into the first half of next year is simply not going to happen. That will be a setback, “Sobie told CNBC’s” Squawk Box Asia “on Thursday. “Because we don’t know too much about this variant and we don’t know what’s coming up.”

While much is still unknown about Omicron, the World Health Organization warned that the variant spreads “significantly faster” than the delta strain and could change the course of the pandemic.

The highly infectious variant has now been detected in at least 89 countries and forced some governments to impose stricter containment measures during the holiday season.

Singapore freezes new quarantine-free ticket sales

On Wednesday Singapore said it would freeze new ticket sales for quarantine-free travel to limit the number of Omicron cases imported.

Singapore’s vaccinated itineraries program has been key to the hinge of the country’s “Living With Covid” strategy, and the latest move is dealing a significant blow to those efforts. Stocks of Singapore’s travel stocks like Singapore Airlines fell Wednesday after the announcement.

“Singapore Airlines will be hit by the setback in the VTLs,” noted Sobie.

He added that things are not moving in the right direction for Asia Pacific airlines which is “very disappointing”.

“It’s been such a difficult year for airlines in the Asia-Pacific region – a lot worse than expected,” said Sobie.

“It looked like it would get better. Unfortunately, it is only going in the opposite direction now.”

Omicron Covid variant poses very excessive danger, international unfold seemingly

LONDON – The omicron variant of the Coronavirus is likely to spread further and represents a “very high” global risk according to the World Health Organization, which warned on Monday that increases in Covid infections caused by the worrying variant could have “serious consequences” in some areas.

“Given mutations that can confer an immune escape potential and possibly a transferability advantage, the likelihood of a possible further spread of Omicron on a global level is high,” said the WHO in its risk assessment on Monday within a year technical letter to its 194 member states.

“Depending on these characteristics, there could be future increases in Covid-19 that could have serious consequences depending on a number of factors including where the increase can occur. The overall global risk associated with the new VOC [variant of concern] Omicron is rated as very high, “said the UN health authority.

The variant B.1.1.529, which was first seen in South Africa, was described by the WHO on Friday as a “worrying variant”.

In his report on Monday it is said that it is “a very different variant with a high number of mutations …

Known strangers

However, there are still considerable uncertainties and unknowns in relation to this variant, it said and repeated this mood on Monday.

First, experts don’t yet know how communicable the variant is and whether an increase in infections is related to immune escape, intrinsic increased communicability, or both.

Second, there is uncertainty about how well vaccines protect against infection, transmission, and clinical disease of varying degrees of severity, as well as death. And third, there is uncertainty as to whether the variant has a different severity profile.

The WHO has announced that it will take weeks to understand how the variant can affect diagnostics, therapeutics and vaccines. However, preliminary evidence suggests that the strain has an increased risk of reinfection.

Continue reading: A strongly mutated variant of Covid is appearing in southern Africa: We know that so far

Early data suggests that the variant is spreading faster in South Africa than previous strains and that the variant could trigger a new wave of infections. according to an analysis by the Financial Times.

Covid symptoms related to Omicron have been described as “extremely mild” by the South African doctor who first sounded the alarm about the new strain.

Continue reading: South African doctor, who was the first to discover the Omicron-Covid variant, explains the symptoms

It is very important to remember that so far only a small number of cases have been reported worldwide – in several countries in southern Africa and a couple of cases by doing United Kingdom, France, Israel, Belgium, the Netherlands, Germany, Italy, Australia, Canada, and Hong Kong, but none yet in the US – so it might take a while to fully understand which specific symptoms, if any, are attributable to the larger Omicron variant.

It is also too early to say what health risk the new variant poses on a global level; the international community has already seen several increasingly virulent strains of the coronavirus, first with the “Alpha” variant and then with the “Delta” variant, which is currently dominant worldwide.

Covid vaccines have been instrumental in reducing serious infections, hospital stays and deaths, so new variants are being closely monitored to assess whether and how they could affect vaccine effectiveness.

Mitigation plans

WHO urged Member States to step up monitoring and sequencing efforts to better understand variants, including Omicron, and step up community testing to see if Omicron is in circulation.

It also urged member states to speed up Covid vaccinations “as soon as possible”, especially for high priority groups.

News of a new variant scared global markets on Friday, but European stocks Climbed Monday morning. The region is already grappling with a sharp spike in Delta variant infections, which is putting pressure on health services in a number of countries, including Germany and the Netherlands.

The WHO urged countries to take mitigation measures to prepare for a possible surge in Covid case numbers and the associated pressure on the health system, to ensure that mitigation plans are in place to maintain basic health services, and the necessary resources for Health care providers are in place to respond to potential surges. “

World Covid deaths hit 5 million as pandemic takes staggering toll

Two women walk next to graves of people who died due to coronavirus disease (COVID-19) in the Parque Taruma cemetery in Manaus, Brazil, on May 20, 2021.

Bruno Kelly | Reuters

More than 5 million people have died of Covid-19 in less than two years as the world continues to battle the highly contagious Delta strain of the virus and keep an eye out for new mutations.

According to data collected Monday by John Hopkins University, 5,000,425 Covid-19-related deaths have been recorded worldwide. 745,836 people have died of Covid-19 in the United States, making it the country with the most recorded deaths.

The coronavirus pandemic, which first appeared in China in late 2019, continues to cause deadly consequences worldwide.

It is as a result that many countries are lifting pandemic restrictions and ending lockdowns, which were imposed to varying degrees throughout 2020 in an attempt to stop the virus from spreading.

The rapid development of Covid vaccines, clinically proven to significantly reduce serious infections, hospital stays, and deaths from the coronavirus, has helped dramatically reduce the number of people dying from Covid, especially in western countries where the vaccination programs are at an advanced stage.

Nonetheless, there have been growing concerns in recent months about an increase in infections, hospital admissions, and deaths as winter approaches, not only among the unvaccinated, who are far more at risk of serious complications from Covid, but also among the elderly (who are too vaccinated first), as immunity wears off over time.

This is breaking news, please check back for more updates.

World delivery is incomes probably the most cash since 2008 as pandemic ache wanes

The globe gets its biggest payday since 2008 as the combination of booming demand for goods and a global supply chain collapsing under the weight of Covid-19 drives freight prices higher and higher.

Whether giant container ships piled high with 40-foot steel boxes, bulk carriers whose caves hold thousands of tons of coal, or special ships designed for cars and trucks, the revenues for ships of almost all kinds are exploding.

Since the merchant fleet handles around 80% of world trade, the increase extends to every corner of the The 2008 boom brought a huge wave of new ship orders, but the rally was quickly undone by a collapse in demand as a financial crisis sparked the deepest global recession in decades.

The reasons for this boom are twofold – an economic reopening after Covid, which has boosted increasing demand for goods and raw materials. In addition, the virus continues to disrupt global supply chains, clog ports and delay ships, limiting the number of goods available to move goods across the oceans. The majority of the shipping industry has thus achieved record profits in the past few months.

The gold mine revolves around container shipping – where rates keep climbing to new records, but it’s by no means limited to that. the according to Clarkson Research Services Ltd., part of the world’s largest shipbroker, the strongest daily result since 2008. The only laggards are the oil and gas tanker markets, where further declining forces are at play.

“I’m not sure if the perfect storm will cover it all – that’s just spectacular,” said Peter Sand, senior shipping analyst at the Bimco trading group. “It’s a perfect spillover of a scorching container shipping market onto some of the other sectors.”

Container shipping remains the star. It now costs $ 14,287 to move a 40-foot steel box from China to Europe. That is more than 500% more than a year earlier and drives up the costs of transporting everything from toys to bicycles to coffee.

Those gains can already be seen in the profits of AP Moller-Maersk A / S, the world’s largest container line, which increased its estimated profit this year by nearly $ 5 billion last month. As a sign of how profitable the industry has become, CMA said CGM SA – the world’s third largest airline – is freezing its spot rates to preserve long-term customer relationships. In other words, the company is distracting profits.

Other sectors

While demand for merchandise is boosting container markets, one is recovering also ransacked more raw materials and increased the revenue of bulk carriers carrying manufactured goods. Earnings in this sector recently hit an 11-year high and are showing little sign of slowing down as consumption is expected to remain stable for the remainder of the year.

“Strong demand for natural resources combined with Covid-related logistical disruptions” support spot and future freight rates, said Ted Petrone, vice chairman of Navios Maritime Holdings, which owns a fleet of bulk carriers, on a conference call last week. “The fundamentals of supply and demand will remain extremely positive in the future.”

The extreme strength of shipping is so great that some bulk carriers have even moved to carry containers on their decks. Golden Ocean Group Ltd. belongs to the companies that are dealing with the idea. While it could bring additional profits to owners in an already unexpected year, it is not without risks as bulk carriers are not designed to carry the giant boxes.

“It tells a story about the special situation we find ourselves in,” said Ulrik Andersen, CEO of Golden Ocean, earlier this month in the container market.

Tanker lull

While Covid boomed many shipping sectors, for oil tankers it meant loss-making businesses and owners effectively subsidizing the shipping of crude oil for much of 2021.

With OPEC + still keeping some of the supply offline, there are too many ships and too few cargoes, which is keeping revenue down. That burned one of the hottest trades in the industry earlier this year – bullish oil tanker positions in hopes of a summer surge in oil demand.

In view of falling oil stocks on land, analysts continue to expect a recovery. Interest rates could rise in October as inventories dwindle and demand for tankers rises, Pareto Securities analysts, including Eirik Haavaldsen, wrote in a statement to customers.

But for the time being, the tanker market remains the only eyesore for an industry in which freight capacities are becoming increasingly scarce. The ClarkSea Index, which tracks daily earnings across a variety of shipping sectors, has seen its longest monthly gains on record.

These record profits are also seen in more esoteric markets. Car transporters have been the most expensive to rent since 2008. The prices for general cargo ships with heavy equipment are also rising, contributing to a boom led by container and bulk carriers.

“The charter rates reported in containers are insane and the same goes for bulk cargo,” said Alexandra Alatari, shipping analyst at Arrow Shipbroking Group. “The fundamentals are strong enough to support interest rates, which would be the high point of any other year.”

International Funds and Virgin Cash Kind Strategic Alliance to Redefine the Way forward for Digital Commerce

New payment ecosystem to expand networked commerce and provide an integrated suite of digital functions

ATLANTA, September 08, 2021 – (BUSINESS WIRE) – Global Payments Inc. (NYSE: GPN), a global leader in payment technology and software solutions, and Virgin Money, one of the UK’s leading financial services groups, today announced an agreement to leverage Global Payments’s unique two-sided network to deliver market-leading digital payment experiences to Virgin Money customers worldwide.

This press release contains multimedia. Check out the full version here:

The companies announce that they are working on the launch of a new connected payments offering that will bring a seamless experience for Virgin Money consumers and merchants. This new salary offering would expand trading and provide an integrated suite of digital skills.

“We have an unmatched global position that connects both sides of the payments ecosystem and enables us to completely transform the digital commerce landscape,” said Jeff Sloan, chief executive officer, Global Payments. “This new payment solution will reimagine the entire interaction between merchants and their customers, virtually and physically, in order to reduce friction, create added value and promote extraordinary experiences on an omnichannel basis.”

“Expanding our partnership with Global Payments enables us to bring all of our credit and debit cards together on a single platform. Working together allows us to leverage their expertise across the payment ecosystem, combined with our focus on customer experience and being one of the world’s best-known brands, gives us the ability to develop new digital payments offerings to enhance the experience for our millions of private and Business customers as we continue to transform the status quo of UK banking, “said David Duffy, Chief Executive Officer of Virgin Money UK.

Virgin Money will be able to access end-to-end lifecycle data through the new payments offering in its companies to gain better insights into buying patterns and trends in order to bring new products and services to market that directly meet customer needs and which Improve the customer experience journey.

The story goes on

As part of this partnership, Global Payments will act as the exclusive trading services provider for Virgin Money, offering cutting-edge acquiring technology to its large customer base. In addition, Global Payments will expand its longstanding relationship with Virgin Money through its TSYS Issuer Solutions segment. This will create a single unified platform that will add all of Virgin Money’s debit business to its current credit solutions under a new agreement that extends into the next decade, subject to regulatory approval.

About global payments

Global Payments Inc. (NYSE: GPN) is a leading payment technology company providing innovative software and services to our customers around the world. Our technologies, services and the expertise of our team members enable us to offer a wide range of solutions that enable our customers to run their business more efficiently through a variety of channels around the world.

Global Payments, headquartered in Georgia and with nearly 24,000 team members worldwide, is a Fortune 500® company and a member of the S&P 500 with global reach in over 100 countries in North America, Europe, Asia Pacific and Latin America. For more information, visit and follow Global Payments on Twitter (@globalpayinc), LinkedIn and Facebook.

Via Virgin Money UK

Virgin Money UK is a full service digital bank serving 6.5 million customers across the UK. It offers market-leading products and services to meet the full range of customer needs in private and business customers. Virgin Money aims to provide customers with a consistently first class experience through its leading technology platform, telephone banking and a national network of innovative stores and commercial banking centers. By improving its banking business, Virgin Money seeks to serve its purpose of “making you happier with money.”

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Vaccine inequality might value the worldwide financial system trillions: Report

A woman reacts when she is vaccinated against Covid-19 with a dose of the Covishield vaccine on August 12, 2021 at a vaccination center in Mumbai.


The global economy will lose trillions of GDP due to late vaccination deadlines, with developing countries bearing the most losses due to uneven introduction, the Economist Intelligence Unit said in a report.

Countries that fail to vaccinate 60% of their populations by mid-2022 will lose $ 2.3 trillion between 2022 and 2025, the EIU predicted.

“The emerging economies will shoulder about two-thirds of these losses, which will further delay their economic convergence with the more developed countries,” wrote Agathe Demarais, EIU’s global forecasting director.

There is little chance that the vaccine access gap will ever be bridged.

Agathe Demarais

Global Forecasting Director for the Economist Intelligence Unit

Asia will be “by far the hardest hit continent” in absolute terms, with losses of $ 1.7 trillion, or 1.3% of the region’s forecast GDP. Countries in sub-Saharan Africa will lose around 3% of their forecast GDP, the highest percentage, according to the report.

“These estimates are striking, but they only partially capture missed economic opportunities, especially in the long run,” the EIU said, noting that the impact of the pandemic on education was not included in this forecast. Richer countries turned to distance learning during the lockdown, but many in developing countries did not have that option.

More than 213 million people have contracted Covid-19 and at least 4.4 million have died during the pandemic, data compiled by Johns Hopkins University showed.

Rich-poor divide

Wealthy nations are moving far in their Covid vaccination rates, moving towards a booster and reopening their economies, while poorer countries are drastically lagging behind in the race for vaccination.

As of August 23, around 5 billion doses of the vaccine had been given worldwide, but according to Our World in Data, the figure was only 15.02 million of those doses in low-income countries.

“The vaccination campaigns are advancing at an icy pace in low-income economies,” says the EIU report.

The report said that vaccine injustice was due to global shortages of manufacturing capacity and vaccine raw materials, logistical difficulties in transporting and storing vaccines, and hesitation due to suspicion of vaccines.

Many developing countries cannot afford vaccines for their residents either, and hope for donations from richer countries, but global initiatives have not been entirely successful in providing vaccines to those in need.

“There’s little chance the vaccine access gap will ever be bridged,” EIU’s Demarais said in a statement. COVAX, the WHO-sponsored initiative to ship vaccines to emerging countries, has not lived up to (modest) expectations. “

“Despite flattering press releases and generous promises, donations from rich countries have only covered a fraction of the need – and often they are not even delivered,” she wrote.

Covax aimed to ship around 2 billion doses of vaccine this year but has only shipped 217 million doses to date. according to the UNICEF tracker.

Some of the deliveries went to developed countries such as Great Britain, Canada, Australia and New Zealand, reported the Associated Press.

Effects of Inequality

Poorer countries are likely to recover from the pandemic more slowly, especially if restrictions have to be reintroduced due to lower vaccination rates, the EIU said.

Tourists could also avoid countries with large unvaccinated populations for safety reasons, while political resentment is likely to increase, the report said. Residents may be unhappy that their local governments cannot provide vaccines and see states richer than hoarders of the shots.

“Social unrest is very likely in the months and years to come,” wrote Demarais.

Additionally, the virus situation continues to evolve, with herd immunity likely out of reach due to the highly transmissible Delta variant and vaccination being sought “more modestly” to reduce severe cases, hospitalizations and deaths, the report said.

Political leaders are busy responding to short-term emergencies such as the rapid rise in infection rates, but now need to develop a longer-term strategy, Demarais wrote.

“Here, too, the rich-poor contrast will be strong: vaccinated, richer states have a choice, unvaccinated, poorer ones don’t,” she said.

Contained in the Karadeniz money-spinning world empire

  • The Turkish powership conglomerate makes an astonishing amount of money from its specialist offering to frail and broken states.
  • But many of its deals around the world have been criticised as exploitative and irrational.
  • South Africa may become the biggest prize of all. And, little known, we have already helped fund the growth of this corporate empire.
  • Karadeniz Holdings, the company that hopes to moor powerships in three local ports, commands a rapidly expanding fleet of these seaborne power plants, raking in over $1-billion per year around the world.

    Most of this was built in the past five years alone, bearing testimony to the group’s aggressive strategy of courting governments that are, as chief executive Orhan Karadeniz once told an American diplomat, “desperate” for electricity.

    This success has however often relied on what are arguably opaque and ill-conceived deals that favour the company over the client state.

    In at least two significant cases credible allegations of corruption have been made, leading to formal investigations, as amaBhungane has previously reported. In other instances, deals seem so patently against the self-interest of the governments signing the contracts that questions of probity are unavoidable.

    Other recurring features include insistence on large prepayments and costly government-backed guarantees as well as a willingness to resort to cutting the power off if payments are missed or disputes arise.

    It is also conspicuous how the company tends to sail in the wake of Turkish president Tayyip Erdogan’s diplomatic travels, acting as a national champion with all the political cover that implies.

    One of its latest potential deals, almost as valuable as South Africa, is a bid to supply

    1 000 megawatts to Libya. This was announced in May last year, immediately after Erdogan visited Libya.

    Likewise, a contract to supply Haiti was announced late last year in the context of a diplomatic phone call between Erdogan and the Haitian president Jovenel Moïse (since assassinated), followed by a joint media briefing by Haiti’s foreign minister and Karpowership executives.

    In 2019 Cambodia briefly contracted a powership and when the deal was announced by Prime minister Hun Sen he pointedly “expressed thanks to Turkish ambassador Ayda Unlu for facilitating the deal”, according to local media.

    Over time Karadeniz’s business model has also shifted decisively from being a provider of short-term power supply for urgent temporary shortfalls, to effectively making itself the costly solution to permanent “emergencies”.

    And it has all paid off.

    How Karadeniz makes its money

    AmaBhungane has reviewed the financial statements of Karadeniz’s Dutch subsidiary Karpowership International BV for 2015 through 2019 as well as its Maltese subsidiary which is also called Karadeniz Holdings. These documents are available through the Maltese company register.

    While the group has a sprawling and complex corporate structure spanning the countries where it operates as well as several secrecy jurisdictions and tax havens, the Dutch company is where the global powership business is consolidated.

    .amab assets

    The standout features from the financial statements are the breakneck pace of the company’s growth and the profitability of operations – driven by a handful of “big fish” client states: Ghana, Indonesia and Lebanon.

    And even if South Africa does not join this club it has already contributed significantly to Karpowership’s growth by funding its key Ghanaian operation. The Development Bank of Southern Africa (DBSA), owned by our national treasury, gave the company an exceptionally large loan of $100 million to build the powership now moored in Ghanaian waters.

    In 2011 Karadeniz had only five operational ships with a combined capacity of 785MW, contracted to Iraq and Pakistan. By the end of 2019 its floating power generation capacity had grown to 3 100MW, including the 450MW vessel partially funded by the DBSA. On its website the company claims this has since expanded to roughly 4 100MW and it intends to add another 4 400MW.

    Thanks to this expansion the company’s revenue has rocketed from under $400 million in 2014 to $1.1 billion in 2019.

    .amab assets

    The powership business is at heart about renting out ships and their generation capacity to create a guaranteed income stream. The revenue figure includes both this rental income and the fuel that Karpowership buys and then sells to the client as a “pass-through”. The rental income shows how much money is made irrespective of how much power is actually sold.

    .amab assets

    A good intuitive measure of how much money Karpowership is actually making off its frail clientele is the dividend it pays its parent company every year. In 2015 this was barely $30 million. In 2019 it was an astonishing $321 million.

    amab assets.amab assets

    In 2019 gross profits from its Ghanaian operation alone came to $197 million according to the financial statements for Karadeniz Holdings in Malta.

    The company has invested billions in powerships and continues to do so. Its asset base more than tripled between 2015 and 2019 to over $4.5 billion.

    amab assets.amab assets

    South Africa: the elusive whale

    Despite growing success elsewhere in the world it is also clear that South Africa remains the elusive Moby Dick.

    Karpowership recently suffered a serious setback when the department of forestry, fisheries and environment shot down its environmental impact assessments, as explained by amaBhungane. This could jeopardize its status as preferred bidder to provide 1 220MW of capacity under the department of mineral resources and energy’s emergency Risk Mitigation Independent Power Producer Procurement programme (RMI4P).

    The RMI4P deal would be a game-changer for Karadeniz’s powership business, the largest single contract the group has secured in terms of megawatts and also in terms of length at 20 years. Thanks to a take-or-pay clause in the contract Eskom would have to sign, Karpowership would have guaranteed income for those two decades whether or not it provides electricity.

    It could be immensely profitable for Karpowership SA, the local subsidiary that is 49%-owned by a South African consortium.

    AmaBhungane’s calculations show that the local subsidiary would earn a guaranteed minimum of R7.9 billion and a maximum of R11.3 billion per year over the 20-year contract.

    That’s the cost to Eskom with fuel included.

    For the parent Karpowership International the rental income is the more important thing. Based on the company’s financial statements and documents it submitted for its local RMI4P bid this rental income from its powerships alone will likely be in the region of R95 billion over the 20-year duration of the contract. That’s 32% of its total enlarged global ship rental revenue. And that excludes the spare parts the parent company will be selling to the local one.

    This percentage assumes that revenue from existing contracts have stayed more or less level since the end of 2019, an assumption that is not entirely far-fetched given the Covid-19 pandemic’s impact on economic activity worldwide.

    Under any scenario the RMIPPPP represents a coup for Karadeniz which explains why it has pursued Eskom for a deal since at least 2015.

    In response to detailed questions about its global operations a spokesperson of the local subsidiary Karpowership SA responded with the following paragraph:

    “Karpowership is proud to work around the world providing vital electricity in its partner countries to support people and businesses. Karpowership SA looks forward to getting to work in South Africa, helping to ease load shedding and support the economy.”

    How Karadeniz moved into powerships

    This snowballing enterprise began modestly – in the middle of a war.

    In 2003 in the wake of the American invasion of Iraq, Karadeniz signed a deal with the Coalition Provisional Authority to supply a modest 80MW across the southern Turkish border from the city of Silopi. This later grew to 200MW. The contract was worth $134.2 million by July 2004, according to a report by the Open Society Revenue Watch.

    Karadeniz quickly showed a willingness to go where others feared to tread, accepting payments made partly in heavy fuel oil, and facing up to the hazards of trucking fuel across the border in the midst of an insurgency. But even they were unwilling to build anything on the ground in Iraq.

    The answer was the first powership deal, signed late in 2008 alongside a simultaneous one with Pakistan. Karpowership’s first two powerships dropped anchor at the Iraqi port of Basra in 2010.

    The company’s venture in Iraq featured in a number of American diplomatic cables from Ankara and Instanbul that were made public by Wikileaks in 2010. According to the cables Karadeniz constantly lobbied both the Turkish government and the occupying power in Iraq to clear the path for larger power exports from Turkey. These were mostly unsuccessful, further driving the company towards the powership solution.

    “Karadeniz was clearly proud of his company’s new innovation and [their] success so far in marketing the powership in Iraq and Pakistan suggests that they have found a niche to fill,” the US consul in Istanbul, Barbara Miles, reported to Washington after meeting chief executive Orhan Karadeniz in 2010.

    At that point Karadeniz evidently did not yet see his ships becoming the kind of long-term solution that South Africa and some other clients seem to believe them to be. He did however see how his offering would intersect with the politics of his client states.

    “Karadeniz said … the powership is intended as a short- to mid-term solution that would help a country’s leadership mitigate potential social or political unrest stemming from irregular electricity provision. Karadeniz said they pitch the idea to governments as a three- to five- year plan,” wrote consul Miles.

    A long-term strategy takes shape

    The first contracts in Iraq and Pakistan were three and five years in duration and put on display key features of how Karpowership would conduct its business going forward.

    One feature was the insistence on money upfront.

    In 2009 Iraq paid an advance of $72 million with another advance of $10.5 million when that contract was renewed in 2012. Pakistan paid $80 million upfront – a payment that would later be scrutinised in a major corruption probe into alleged kickbacks for Pakistani politicians.

    In Pakistan things quickly turned sour. The contract was rescinded in 2012 alongside a number of other Rental Power Purchase deals born out of an opaque emergency procurement programme. Karpowership had at that point delivered very little power and Pakistan demanded its deposit back. When that was not forthcoming it “arrested” Karpowership’s ships in Karachi.

    This triggered a massive legal battle lasting seven years at the World Bank’s International Centre for Settlement of Investment Disputes. In its arguments at ICSID, Pakistan called the powership contract “a considerable net drain on the Pakistani economy”, specifically because it included a monthly $10 million take-or-pay element.

    ICSID awarded the company damages that, with interest, amounted to a devastating $1.2 billion. But Pakistan was simultaneously pursuing a corruption case against an alleged politically connected fixer who was accused of channeling bribes into the country on the company’s behalf. Karpowership dropped its claim shortly after Pakistani authorities provided new details of its case.

    When the settlement was announced in November 2019 the parties very prominently extended thanks to Turkish president Tayyip Erdogan for his contribution to the truce, demonstrating Karpowership’s political profile.

    After Iraq and Pakistan, Karpowership’s next contract was Lebanon where negotiations had been started as early as 2010, as Karadeniz told Miles. The company’s role as a kind of diplomatic extension of Turkey became clear when Lebanese prime minister Saad Hariri visited the Karpowership shipyard during a state visit to Turkey that year.

    The Lebanese deal was ultimately inked in 2012 and seemingly became a major money-spinner. According to the financial statements of Karadeniz Holdings (Malta), Lebanon contributed gross profits of $88.8 million and $67 million in 2018 and 2019 respectively.

    After the initial term of six years, the Lebanon deal was extended, making it Karpowership’s longest-running contract. As in Pakistan however, matters have soured with similar allegations of corruption emerging this year and Lebanese prosecutors threatening to impose a $25 million fine. In response Karpowership cut off a quarter of the country’s power, claiming the country was heavily in arrears. Power was restored more than a month later at the end of June as a “goodwill gesture”, according to Lebanese media.

    The company’s ability and readiness to flip the switch was also recently on display in Sudan where it has had a small contract since 2018. In November last year it turned off the lights citing non-payment and only resumed power supply in January. The company claims to supply 10% of Sudan’s power.

    In Guinea-Bissau the company has a five-year deal. It gave the government an ultimatum to provide an “advance payment” of $4.9 million or face blackouts, according to a World Bank report. The World Bank decided to pay Karpowership directly out of the aid earmarked for the country.

    In the Lebanese dispute Karpowership claims it is owed more than $100 million in arrears and that the government has failed to pay for 18 months. If true, this indicates a seriously escalating debt. At the beginning of 2020 the country still had a $26.2 million prepayment credit with Karpowership, according to financial statements for 2019.

    The tariffs charged in Iraq, Pakistan and Lebanon also provide insight into Karpowership’s large margins. According to data presented in ICSID’s ruling, the tariff charged to both Iraq and Pakistan was $0.063/kWh with those in Iraq escalating to $0.0817 in 2012. The operating expense was $0.026 excluding once-off setup costs and taxes.

    In Lebanon in 2017, Karpowership charged a capacity charge of $0.071 before the cost of fuel was added, according to a 2020 report sponsored by the World Bank. At the time the full charge to Lebanon was over $0.14/kWh. “With hindsight, it would likely have been cheaper to have invested in permanent capacity, rather than keep paying high take-or-pay charges”, the study concluded.

    This opportunity cost sunk on an asset that will eventually just sail away would become a recurring feature in Karpowership deals.

    Ghana, the goldmine

    The West African country was Karpowership’s first African client after an initial focus on the Middle East and has been the company’s most important single client by a wide margin, contributing 24% of its underlying “rental” income and half of its gross profit.

    The deal was initially signed on 5 June 2014 under the auspices of an emergency procurement process which meant there was no tender and the terms of the contract were kept largely secret.

    As with the RMIPPPP in South Africa, there was a jarring mismatch between the ostensible “emergency” nature of the deal and the term of 10 years.

    The initial Ghanaian contract between Karpower Ghana and Electricity Company Ghana (ECG) called for two powerships with a capacity of 225MW each. The first one reached the country in December 2015, but the deal soon changed to an arrangement where a single 450MW ship would be used instead of two smaller ones. The new deal formally started in 2017 and will last until 2027.

    The Ghanaian contract went through three iterations that raise questions about whose interests were being promoted.

    The first renegotiation happened in 2016 – an election year that saw the governing National Democratic Congress (NDC) lose to the New Patriotic Party (NPP). Before the handover the NDC seemingly gave Karpower some expensive parting gifts.

    There was an apparent push to get the amended deal signed, which resulted in a tax exemption of $225 million being granted in October 2016 without parliamentary approval. In December that year the exemption was approved after the fact in the last days of the NDC term. The NPP, which had been a vocal critic of the deal, took office a few days later in January.

    More importantly, the terms of the deal changed significantly before the election, increasing the cost to Ghana.

    An original fixed operation and maintenance (O&M) charge of $0.0185 was negotiated upwards to $0.03. This increased this portion of the cost from $64.8 million to $107.1 million annually, according to figures published by a regional think tank, the Africa Centre for Energy Policy. After the NPP took office it belatedly renegotiated the agreement again in 2018. While the costs were reduced they were still higher than in the original agreement. The company also got a guaranteed annual increase in O&M payments of 4% irrespective of actual inflation.

    According to the Ghanaian Public Utilities Regulatory Commission, a body similar to South Africa’s national energy regulator Nersa, Karpowership charged a total tariff of roughly $0.11/kwh in the 2019/20 financial year.

    As part of the 2018 renegotiation there was a plan to extend the Ghana contract by another ten years to 2037, which failed reportedly because the board of Electricity Company Ghana rejected it.

    Ghana, the South Africa connection

    South Africa’s DBSA provided Karpowership with a $100 million loan to “construct, operate and own” the Osman Khan powership which is servicing Ghana.

    It is one of the largest loans on the DBSA’s books outside South Africa. It is exceptional for another reason: it is purely to the benefit of a private company and also meant to fund a movable asset that will eventually leave Africa and be redeployed wherever Karpowership clinches a new deal.

    Very nearly all other major loans extended by the DBSA are to state-owned or partially state-owned entities and meant to fund the construction of local fixed infrastructure.

    Mohan Vivekanandan, Group Executive: Origination & Coverage at the DBSA told amaBhungane that the funder was “quite comfortable that the project fit our mandate”.

    “We don’t necessarily differentiate between a permanent asset versus a movable asset. Because ultimately the question is, is it going to improve the lives of the people?”

    “Ghana was going through a power crisis somewhat similar to what’s happening in South Africa now, where there was a shortage of power, and they were looking for short-term, medium-term fixes, while longer term solutions were also coming online.”

    Asked about projects of a similar scale owned exclusively by a private entity, the DBSA could provide only directly comparable one, incidentally also in Ghana: Genser Energy, a private power company set up to supply electricity to mines also got a $100-million loan. Unlike Karpowership its infrastructure is fixed.

    The other loans of comparable size that the DBSA was willing to disclose were all made to companies that are either wholly or partially state-owned and geared to building fixed infrastructure.

    The only one larger than the Karpowership loan was a $120-million loan to an offshore natural gas project in Mozambique led by Total but nonetheless 15%-owned by the government.

    An internal DBSA note on the Karpowership loan from July last year gave the powership project a glowing review. “Demand and Supply projections for the Ghana Energy Sector, show that the Powership will remain a critical supplier to the grid for the foreseeable future” reads the note. The cost of repayments are easily met by the tariffs paid by Ghana and the company is in rude financial health, it continued.

    “For 2019, US$319 million has been received from the ECG. US$175 was for capacity payments, which covers lenders debt obligations. The remaining US$145 million was for fuel invoices.”

    The note said parent Karadeniz Holdings had experienced high but declining margins over the years at the Gross, EBITDA and Operating level: “The average operating margin over the 6 years has been 33%.”

    An operating margin is the profit rate based only on normal operating expenses – excluding taxes, interest and capital expenditure on, for instance, ships. A margin of 33% would be considered spectacular in most industries.


    Karpowership’s next stop after Ghana was Zambia, where it landed a short two-year contract to provide 100MW which escalated to 200MW. It serviced the landlocked county through neighbouring Mozambique’s grid, reportedly at a high tariff of $0.167/kWh. A report by Africa Confidential however put that figure even higher at $0.23/kWh. Once again there were media allegations of paying politically connected fixers, although these have never been substantively backed up.

    Sierra Leone

    Another case of dramatic renegotiation, similar to Ghana, came from Sierra Leone where Karpowership struck a deal in 2017 to provide 30MW base load for five years.

    Elections in March the next year saw the Sierra Leone People’s Party replaced by the All People’s Congress. By June the deal had been revised. The five-year term was cut down to two years. The tariff was cut from a high $0.19596/kWh to a still expensive $0.164/kWh. Tax cuts provided by the previous government were also reversed, according to a government announcement.

    Liberian dead-end

    Karpowership suffered an uncharacteristic failure in Liberia in 2018 where it negotiated a controversial 10-year deal that was quickly condemned by diplomats from Western donor countries and the World Bank. The contract was for a relatively paltry 36MW, but with a guaranteed take-or-pay of 24 hours per day, 365 days per year.

    Ambassadors from the European Union, Germany, Ireland, Norway, Sweden, Britain, the US and the World Bank’s Liberia office co-signed a protest letter dated 17 July 2018 which was leaked to the Liberian media.

    Liberia had an 88MW hydropower plant, the Mount Coffee plant, and thermal generation capacity of 38MW. The donors had been funding Mount Coffee as well as expansion of the grid belonging to the Liberia Electricity Corporation (LEC). In their letter they noted that the country already had more generating capacity than it could use, given peak demand of only 31MW. The only problem was the dry season when Mount Coffee’s generation was low and undependable. The letter suggested power supply could potentially fall short by up to 15MW, hence the powership deal. But, the letter argued, the terms of the deal could not stand up to scrutiny.

    “The remedy … cannot be a decade-long, year-round financial commitment to purchase 36MW of power and fuel to keep a power barge running 24/7. The Karpower proposal provides more of what Liberia already has in excess, would inhibit LEC’s ability to focus on connections and distribution, and would incur for LEC unnecessary debt in the millions of dollars that would result in higher prices for consumers,” reads the letter.

    Bagging the big fish

    Karpowership has done a lot of business with tiny states desperately seeking amounts of power that, in the larger scheme of things, are very small. The terms of these agreements have also often been short.

    The company’s financial statements show that its real profits rely on bagging whales: big, long contracts like the one in Ghana. Its next-best deal has been in Indonesia where it was contracted for a collective 1 000MW across a number of the islands that make up that nation. Karpowership was last year reportedly bidding for a 1 000MW contract in Libya as well.

    The prospective Haitian deal is meant to last 20 years, according to a government press release although it is unclear how many megawatts are involved – or whether it will be affected by the president’s assassination.

    And then of course, there is the biggest whale in its sights: South Africa …

    Source: News24

    Inside the Karadeniz money-spinning global empire Source link Inside the Karadeniz money-spinning global empire

    International watchdogs float cures to treatment cash market fund stress

    LONDON (Reuters) – Global financial regulators suggested options ranging from capital buffers to fees to avoid central banks having to bail out the $ 8.8 trillion money market fund (MMF) sector again, as they did last year have done in a “jump on cash”.

    The Financial Stability Board (FSB), which coordinates the financial rules for the G20 economies, on Wednesday put forward a selection of measures for regulators to make MMFs more resilient and reduce the temptation of investors to flee into the exits.

    During the extreme market turmoil in March 2020, the Federal Reserve and other central banks had to inject liquidity into the financial system for the second time in 12 years to keep money market funds from buckling under the strong demand for redemptions.

    The industry has argued that all parts of the financial system were hit hard last year at the height of the COVID-19 crisis when economies were locked into a pandemic.

    The MMF sector, with more than half in the United States, is vital to the short-term funding of the economy and businesses as it invests in government bonds and short-term papers that allow investors to redeem their stocks on a daily basis.

    “MMFs are prone to sudden and disruptive repayments and can face challenges in selling assets, especially under stressful conditions,” the FSB said in a report.

    One option is “swing pricing,” or the ability to allow fund managers to impose transaction costs on those who redeem shares in order to reduce the impact on investors who remain in the fund, the FSB said.

    Another possibility is that a small portion of each investor’s shares will not be redeemed immediately and the implementation of “gates” or temporary bans on investor exits will be changed, he added.

    A sufficient capital buffer would also ease the pressure from high redemptions, although that would add to the industry’s costs, the watchdog said, adding that stress testing for individual MMFs and for the sector as a whole could work as well.

    Eric Pan, CEO of the global fund industry association ICI, said it was encouraging that the FSB was also recognizing the need to improve the way the broader short-term markets, including commercial paper and certificates of deposit, work better.

    “What is important is that the FSB recognizes that certain reforms such as capital buffers and swing pricing could ultimately eliminate certain money market funds from the market,” said Pan.

    The FSB has carried out a public consultation on the policy options and will publish a final report in October.

    It would be up to the regulators in each member country to decide on the combination of measures so that they could bypass steps such as capital requirements that have divided regulators in the past as well as the industry.

    The FSB will follow up on the implementation reviews.

    Reporting by Huw Jones; Editing by Alexander Smith, Kirsten Donovan

    International watchdogs float treatments to remedy cash market fund stress

    By Huw Jones

    LONDON, June 30 (Reuters) – Global financial regulators suggested options ranging from capital buffers to fees to avoid central banks having to bail out the $ 8.8 trillion money market fund (MMF) sector again as they did last have done in a “bump on cash” year.

    The Financial Stability Board (FSB), which coordinates the financial rules for the G20 economies, on Wednesday put forward a selection of measures for regulators to make MMFs more resilient and reduce the temptation of investors to flee into the exits.

    During the extreme market turmoil in March 2020, the Federal Reserve and other central banks had to inject liquidity into the financial system for the second time in 12 years to keep money market funds from buckling under the strong demand for redemptions.

    The industry has argued that all parts of the financial system were hit hard last year at the height of the COVID-19 crisis when economies were locked into a pandemic.

    The MMF sector, with more than half in the United States, is vital to the short-term funding of the economy and businesses as it invests in government bonds and short-term papers that allow investors to redeem their stocks on a daily basis.

    “MMFs are prone to sudden and disruptive repayments and can face challenges in selling assets, especially under stressful conditions,” the FSB said in a report.

    One option is “swing pricing” or the ability to allow fund managers to impose transaction costs on those who return shares in order to reduce the impact on investors who remain in the fund, the FSB said.

    Another possibility is that a small fraction of each investor’s shares will not be redeemed immediately and the implementation of “gates” or temporary bans on investor exits will be changed, he added.

    A sufficient capital buffer would also ease the pressure from high redemptions, although that would add to the industry’s costs, the watchdog said, adding that stress testing for individual MMFs and for the sector as a whole could work as well.

    The story goes on

    The FSB has carried out a public consultation on the policy options and will publish a final report in October.

    It would be up to the regulators in each member country to decide on the combination of measures so that they could bypass steps such as capital requirements that have divided regulators in the past as well as the industry.

    The FSB will follow up on the implementation reviews.

    (Reporting by Huw Jones; Editing by Alexander Smith)