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Ideas & Debate

Why oil industry sought Njonjo’s intervention in 1981 on prices

 

Firstly, I would like to sincerely wish Charles Njonjo the best of wishes on his attainment of 100 years. For those of us who are in the senior tier of our lives, attaining such a long and healthy life is something we all aspire to. When I last saw Njonjo two years ago at a golf function at Muthaiga he was 98 years and I could tell he was strong enough to hit 100 years and beyond.

In 1981 the oil industry found itself seeking assistance from Njonjo, who was perhaps the second most influential person after President Daniel arap Moi. Global oil prices had climbed threefold from $ 11 per barrel to about $35 after the Iranian revolution and the subsequent Iran/Iraq war. The oil industry was desperately seeking a price increase from the Treasury to recover escalating costs, but without success leaving the industry with untenable cash flows.

Unlike today when a monthly price trigger formula automatically adjusts prices, in those years the timing and quantum of price increases were at the mercy and discretion of the Minister for Finance who at the time was the Vice President, Mwai Kibaki. In desperation the oil companies decided to lobby alternative centres of power that included Mr Njonjo and the late Jeremiah Kiereini.

Esso Oil Company, where I was the supply planning manager, was assigned to talk to Mr Njonjo, and this is how my CEO and I found ourselves in his office at the old Jogoo House. He was the Minister for Constitutional Affairs and the MP for Kikuyu Constituency.

My expatriate CEO explained the oil industry predicament, and then Mr Njonjo asked me, “Wachira, why do you think Mwai does not understand and act on your case which appears very straight forward”. I had to think very quickly because this appeared a politically loaded question. I replied that it is possible that the numerous ongoing transfers of senior personnel in the Treasury are affecting flow of critical information to the Minister for Finance. I felt I had made a good score.

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Then he intimated that Kenyans should feel courageous and point out things that are not going on well. For instance, what did I think of the article by columnist Adhaja in The Standard of that morning? Luckily I had read the article, and I knew it was deeply political, because the author had been writing articles that were critical of Mwai Kibaki’s macroeconomics. I was also aware of an ongoing cold war between Mr Njonjo and Mr Kibaki. I replied that the article was indeed right in that a 65 percent top income tax bracket was too high (today it is 30 percent) and was killing economic motivation. I was winning him over and felt happy with myself.

At the end he summed up that our case was strong and deserving and promised to raise the matter in the cabinet that Thursday. We had met on a Tuesday, and on Friday that week the Treasury awarded us a reasonable price increase.

The following week I got a letter personally addressed to me by Mr Njonjo signed with the green felt pen that he was known to always use. He requested me to get assistance from Esso for the Kikuyu Constituency Development Fund. Since Esso had a very strict policy on contributions that even remotely looked political , I quickly gathered some personal cash and sent a Sh3,500 personal cheque as my contribution to the Fund, with a cover letter explaining that Esso had exhausted its budget for social programmes for that year. He politely acknowledged receipt of the donation and thanked me.

Immediately after that Cabinet meeting, the government decided to break multinationals stranglehold on oil supplies and formed the National Oil Company of Kenya (NOCK) with a mandate to supply 30 percent of Kenya oil demands.

It also signaled the entry into oil business by powerful politicians from Rift Valley. By 1983 Mr Njonjo had exited from government and politics.

To Charles Njonjo, I repeat my best wishes. You parachuted from politics at the right time, and you have maintained a clean name which is what matters most.

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