The High Court has cleared Tanzanian business magnate to set up a Sh16 billion cooking gas plant and storage facilities at the Mombasa port, escalating a vicious billionaire’s brawl against tycoon Mohamed Jaffer.
Taifa Gas Investments SEZ Ltd got a reprieve after a court struck out a petition challenging its construction of a 30,000 metric tonnes of LPG terminus at Dongo Kundu Special Economic Zone in Likoni, Mombasa.
The suit had derailed Taifa Gas, which is owned by Tanzanian tycoon Rostam Aziz, after the energy regulator gave the firm the nod to build the mega plant in 2022.
The entry of the business magnate, who was ranked the first dollar billionaire in Tanzania by Forbes in 2013, signals a vicious battle for control of the Kenyan cooking gas market that remains under the tight leash of Mr Jaffer, a Mombasa-based tycoon.
The Court ruled that, having come to the finding that issues and parties in the petition were the same as those in the National Environmental Tribunal (NET) appeals, it followed that the petition was re judicata (issue having been adjudicated upon and determined).
“The finding that the respondent’s (company’s) preliminary objection on the ground of res judicata is upheld, suffices to determine the petition and application,” ruled the court.
Mr Aziz had in 2021 complained that Nairobi went mute on his 2017 enquiry to build an LPG plant, lamenting the barriers for Tanzanian entrepreneurs seeking a presence in Kenya.
Taifa Gas is the largest LPG supply company in Tanzania and has been feeding the Kenyan retail market via road.
Now, Mr Aziz is seeking a large share of Kenya’s LPG market.
It also sets the stage for a billionaires' fight pitting Mr Jaffer and Mr Aziz that is first expected to cut the cost of handling and evacuating cooking gas from the ships to the mainland, allowing dealers to transfer the cost relief to consumers.
Just like Mr Jaffer, Mr Aziz has invested in building political networks that saw him serve as MP and treasurer of the Tanzanian ruling party -- Chama Cha Mapinduzi (CCM).
Mr Aziz’s ambitions to establish a retail cooking gas presence in Kenya look set to trigger another market fight with oil dealers like Vivo, Rubis and Total, for control of the 2.87 million households (23.9 percent of Kenyan households) that use the fuel for cooking.
“This ruling is not only a vindication of our commitment to due process and environmental responsibility, but also a milestone for Kenya’s energy transition,” said Mr Aziz on Saturday in a statement.
“Our 30,000-metric-ton LPG terminal, the largest in Africa, will expand access to clean energy, strengthen regional energy stability, and create new pathways for prosperity,” he added.
This will be right at Mr Jaffer’s doorstep, with his firm Africa Gas and Oil Ltd (AGOL) operating a multi-billion shilling facility in the same area.
It is unclear what AGOL charges oil firms for handling cooking gas, but the lack of stronger players in the business suggests a lack of significant competition that has kept the fees high.
AGOL has a storage capacity of 25,000 tonnes of LPG following an earlier upgrade of the facility, initially built in 2013.
The Environment and Land Court (ELC) ruled that it was apparent from the petitioners’ evidence was based on the project requisite approvals and permits from the National Environment Management Authority (Nema).
It further noted that the petitioners’ claim was not essentially about their constitutional rights and freedoms being infringed or threatened by project-related works, but was questioning the process and status of (project) approval and execution.
“The petitioners’ claim in this petition is therefore not a constitutional petition, but a challenge on the respondent’s Environmental Impact Assessment (EIA) licence to the LPG project,” ruled the court.
“The court therefore has no reasons or basis upon which to fault the process undertaken by the respondent and approvals obtained in respect of their LPG project,” ruled the court.
The ELC ruled that, having found that NET is within its jurisdiction to address any appeals relating to the EIA licence issued to Taifa Gas Investments SEZ Ltd by NEMA, then the case was filed before it prematurely.
The court ruled that the right forum to seek relief from was the Tribunal and that it (court) would be approached through an appeal.
The petitioners claimed LPG plant and intended to clear indigenous natural trees and vegetation as well as excavate the land, arguing it will lead to soil erosion and environmental degradation of the land and its environs.
They were also seeking compensation from Taifa Gas Investments SEZ Ltd for the destruction of the environment, indigenous trees and vegetation and excavation works in violation of the law.
Jaffer’s AGOL was built to allow for bulk imports of cooking gas to lower unit costs through economies of scale and curb shortages, which had been made difficult by the smaller import terminal at Shimanzi.
The AGOL plant and Proto Energy, the maker of Pro Gas, have offered Mr Jaffer a firm grip on the lucrative cooking gas market.
The business mogul is also the owner of Grain Bulk Handlers, which has a near monopoly in the discharge and handling of bulk grain cargo at the Port of Mombasa.
Private companies have been angling to benefit from the growing use of cooking gas in Kenya in the absence of investments by the government via import and storage facilities.
