EDITORIAL: Mining officials must avoid costly compensation claims

Trade principal secretary Chris Kiptoo. FILE PHOTO | NMG
Trade principal secretary Chris Kiptoo. FILE PHOTO | NMG 

Trade principal secretary Chris Kiptoo’s revelation that Kenya is facing Sh334 billion compensation claims filed by international mining firms made for an uneasy read this week.

Were the claims to materialise, the payoff would be enough to pay off the hefty Chinese loan borrowed to finance the Mombasa Nairobi Standard Gauge Railway.

Mr Kiptoo’s revelation came on the same day that Tullow Oil, the British multinational prospecting for oil in Turkana, projected that it would cost up to Sh293 billion to drill and take to market the first barrel of the petroleum deposits.

The two big figures are evidence that Kenya’s mining sector is on the cusp of big changes, which naturally comes with big expectations.

Kilimapesa Gold in Western Kenya has issued a positive projection for increased production in the year, and so has Base Titanium in Kwale.

Chinese prospectors have discovered coal deposits worth trillions of shillings in the Mui coal basin, Kitui.

It is critical that policymakers and all State officials in charge of relevant government agencies perform their duties with utmost good faith and diligence on behalf of the current and future generation of Kenyans.

Any slip-up could easily cost the country hundreds of billions of shillings either in lost revenue or court claims. There was a tinge of regret in Mr Kiptoo’s tone as he revealed that the Sh334bn compensations claims could easily have been avoided if Kenyan negotiators were more diligent.

Those appointed to draft trade agreements on behalf of the Kenyan people must take time to cross all the “t”s and dot all the “i”s in the contract documents.

Some of the claims, however, appear also to arise from political directives whose legality only the ongoing judicial proceedings will determine.

Former Mining secretary Najib Balala cancelled tens of licences during his tenure, most prominent being Cortec Kenya Limited which is claiming Sh200 billion after it was denied a lucrative deal to extract rare earths at the coast.

Mr Balala at the time said his actions were intended to save Kenyan taxpayers from briefcase operators out to profit from the country’ natural resources.

Hopefully he acted within the law, as the pronouncements could prove to be possibly much more expensive than what he intended to save the country.