Revelations that London-based Goldplat Plc is threatening to sue the government if it hives off its exploration zone without compensation are a clear sign that our policymakers are not serious about the dangers of exposing Kenyan taxpayers to financial liabillities.
The government should tread with care to avoid massive liability.
According to Goldplat, which operates in Kenya through subsidiary Kilimapesa Gold, the government had informed it in October 2017 about an application by an unnamed company to explore for gold in the same area it operates.
The Migori turf where is operates is estimated to have gold reserves worth Sh6.9 billion.
The miner now says that no exploration will be undertaken until the matter is resolved and it receives confirmation that no part of the original exploration licence has been taken away.
This is not the first time the government has been caught up in legal wrangles for violating contracts.
Pacific Wildcat Resources, a Canadian mining firm, instituted an international arbitration against Kenya for cancelling its licence for the exploration and development of minerals in Mrima Hills, Kwale County.
It is demanding billions of shillings in compensation.
UK firms Cortec Pty Ltd and Stirling Capital, its subsidiaries, jointly filed a request for arbitration against Kenya at the US-based International Centre for Settlement of Investment Disputes (ICSID).
The dispute arose after the Mining minister cancelled the licences of Cortec Mining Kenya (CMK) and other firms in 2013 on grounds that they were irregularly issued.
What the government needs to understand is that valid contracts cannot be cancelled on the whims of officials without financial penalties.
Kenyan taxpayers run the run the risk of footing multi-billion shilling settlements for no fault of their own.
Government officials should know that there are well set out parameters that always apply when a contract is to be terminated.
You cannot just wake up one day and terminate a valid contract without financial ramifications .
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
