Economy

State mulls reverting KTDA to parastatal

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Agriculture Secretary Peter Munya. FILE PHOTO | NMG

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Summary

  • The government is considering a takeover of the Kenya Tea Development Agency (KTDA) Limited and have it revert to a State corporation, Agriculture Secretary Peter Munya has disclosed.
  • Mr Munya told Parliament a Cabinet memorandum seeking to revert the firm, currently considered private, back to government is on the cards.
  • He said the agency is a public company having succeeded the Kenya Tea Development Authority (KTDA) which was a parastatal at inception.

The government is considering a takeover of the Kenya Tea Development Agency (KTDA) Limited and have it revert to a State corporation, Agriculture Secretary Peter Munya has disclosed.

Mr Munya told Parliament a Cabinet memorandum seeking to revert the firm, currently considered private, back to government is on the cards.

He said the agency is a public company having succeeded the Kenya Tea Development Authority (KTDA) which was a parastatal at inception.

“All assets are government assets and the new assets by the agency were derived from farmer’s tea earnings. It is not a private company as some people purport it to be,” Mr Munya told a joint Senate committee meeting during consideration of the Crops (Tea Industry) Regulations 2020.

Mr Munya said the ministry and the Attorney General will table before both Houses of Parliament a proper legal opinion on KTDA status.

In June 2000, the agency succeeded the Authority after its existence was revoked through a gazette notice.

The new private company took over the assets, liabilities, obligations and the mandate of the authority, including all its employees. This saw the government lose its stronghold on the management of 54 factories currently under KTDA.

Mr Munya told Senators that more than 70 percent of KTDA assets were acquired at a time it was a State Corporation.

“We recently took over new Kenya Planters Cooperative Union (KPCU) where people were pretending that it was a private company. The same happened to Kenya Farmers Association (KFA), but we have been stopped by the court. We are in court with KFA and we hope to return it to where it was,” Mr Munya said.

The State has previously taken over the New Kenya Cooperatives Creameries (KCC), Kenya Seed Company and Kenyatta International Convention Centre from private hands and returned them back to the public.

Mr Munya said a Cabinet resolution, backed by Parliament will be required to reverse KTDA to a State corporation. “We will consider the option of a Cabinet resolution,” he said.

Mr Munya was responding to questions by Kericho Senator Aaron Cheruiyot who demanded that the government undertakes a forensic audit into the operations of KTDA.

Mr Munya said a forensic audit can only be done once the Cabinet approves KTDA takeover and asked Parliament to also initiate a resolution backing the same.

“If a precedent was set in the takeover of New KCC, Kenya Seed, KICC, KPCU and KFA, then look at a legal way to get back KTDA which was a government institution that changed to private and has become a monster to farmers,” Mohamed Faki who chairs the Delegated committee said.

On the tea regulations, Mr Munya said the reduction of KTDA’s management fees from 2.5 per cent to 1.5 per cent will see farmers save Sh900 million annually. He said KTDA is projected to earn Sh2 billion in management fees this year and if the regulations is enacted, it will cut it to Sh1 billion.