Big investors pay high Nema audit fees despite caps directive
What you need to know:
Nema director-general Geoffrey Wahungu last September said the agency had forwarded a proposed maximum fee limit to Environment secretary Judi Wakhungu for “consideration and gazettement.”
The Ministry is yet to publish the maximum fee, a move that was expected to lower project costs and sharpen the country’s appeal to investors.
The removal of caps has been punitive to businesses undertaking large scale projects such as those in the energy sector and those that break ground to set up greenfield investments, critical in jobs creation.
Investors handling big ticket projects are still grappling with high fees for environmental audits more than a year since President Uhuru Kenyatta promised to introduce maximum caps.
The audits, or environmental impact assessment (EIA), are applicable to projects valued at over Sh10 million and are managed by the National Environment Management Authority (Nema), the sector regulator.
The EIA fee structure was reviewed in 2013 to a minimum of Sh10,000 or 0.1 per cent of project cost but without an upper limit, making it costlier for developers of big projects.
Previously the fee structure had a maximum of Sh1 million. Nema director-general Geoffrey Wahungu last September said the agency had forwarded a proposed maximum fee limit to Environment secretary Judi Wakhungu for “consideration and gazettement.”
This came after President Kenyatta in October, 2014 said the payment of the fees as a percentage of the value of projects is punitive to investors and directed the return to the flat rate.
The Ministry is yet to publish the maximum fee, a move that was expected to lower project costs and sharpen the country’s appeal to investors. Nema officials Thursday said that investors were still paying the charges as a percentage of the value of their projects.
Efforts to reach the Ministry of Environment officials were unsuccessful as they were said to be held up in a “series of meetings.”
The EIA, which is prepared by investors and reviewed by Nema, details project’s site location, its likely impacts on the environment and remedial measures, alongside the project’s decommissioning if it has a lifespan.
The removal of caps has been punitive to businesses undertaking large scale projects such as those in the energy sector and those that break ground to set up greenfield investments, critical in jobs creation. The 2013 review took place as Nema experienced financial shortfalls partly because of reduced revenues from issuance of licences.
“The cap (maximum) has often limited our ability to receive adequate funds to better manage our operations,” Nema director for environmental education, information and public participation Ayub Macharia said in an earlier interview.
Nema requires projects such as mineral processing, oil drilling, infrastructure development, real estate projects and waste disposal to be licensed before their implementation.
Developers whose projects exceed Sh5 million pay a levy of 0.5 per cent of the value of the contract to the National Construction Authority before they can start work.
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