State claims Sh17bn at risk if edible oil cargo not released


National Treasury Principal Secretary Chris Kiptoo on March 6, 2023. PHOTO | LUCY WANJIRU | NMG

The government on Wednesday asked the High Court to lift an order blocking the importation of 125,000 tonnes of edible oil, claiming that the freeze will occasion a loss of Sh17 billion, which has already been paid to suppliers.

According to the government, the goods are likely to go to waste as they are perishable. Through senior counsel Ahmednasir Abdullahi, the government said the product is being held in a depot in Mombasa and continued freeze might see them go to waste.

The High Court blocked the importation of the oil in June following an application by the Law Society of Kenya (LSK), arguing that the decision to allow the Kenya National Trading Corporation (KNTC) to bring in the commodity duty-free was irrational.

Treasury CS Njuguna Ndung’u had defended the move stating that the letter given to the corporation on January 20, 2023, was within the law.

Prof Ndung’u said the country was experiencing a prolonged drought and granting the corporation permission to import the the product was meant to alleviate famine and the high cost of food.

“It (the order) has caused undue hardship. If you keep perishable goods in a warehouse for the next six months, we will lose Sh17 billion,” Mr Abdullahi said, for KNTC.

The government defended the importation of edible oil saying it was within the law and in particular, the East African Customs Cooperation Act, 2004, which Kenya is a signatory to.

In a letter on January 20, 2023, Treasury PS Chris Kiptoo approved the importation of 125,000 tonnes of cooking fat and oil by the corporation duty-free for a period of a year.

But the LSK argues that the letter violates various provisions of the Constitution and Fair Administration Action and Price Control (Essential Commodities) Acts.

The lawyers’ body wants the court to direct the government to comply with the law in procuring exemptions or waivers of import duties and or other taxes. It is LSK's argument that the decision was made in excess of powers, irrational and abuse of powers.

The government said KNTC is a company that is allowed to procure goods for trading purposes outside the public procurement regulations.

The lawyer questioned why LSK chose to block the importation of cooking oil but left out other products such as wheat, rice, sugar and beans, which were part of the letter issued by the State.

The LSK urged the court to dismiss the application, seeking to lift the order and arguing that discharging it will disadvantage local manufacturers who will have to compete with the State corporation.

The lawyers’ body further said the PS did not have the power or authority to write to the Kenya Revenue Authority to grant the exemption to KNTC.

Justice John Chigiti will rule on the matter on September 1.

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