Tata Chemicals Ltd says it is incapable of paying the Sh17bn in land rates accrued on the 224,000 acres of land in Magadi.
The company says it should be exempted from the Finance Act’s land rate charges because, in any case, they have spent Sh276 million (or 3.5 per cent of their revenue) on corporate social responsibilities in the 2017/2018 financial year.
The county government shut down TATA chemicals Kajiado trans-shipment facility, paralysing the company operation.
A bitter dispute has erupted between Kajiado County Government and a Lake Magadi investor over billions of shillings in defaulted land rates. Tata Chemicals Ltd, formerly Magadi Soda, has said it is incapable of paying land rates on the 224,000 acres of land they use to exploit soda ash.
The county government is demanding Sh17 billion as accrued land rate arrears since 2013 with the soda ash investor saying it can only wind up the venture.
In a blow-by-blow memorandum to Governor Joseph Ole Lenku, signed by executive director Harish Nair, the investor says they can only afford to pay Sh150 per acre and not the Sh14,000 per acre as stipulated in the Finance Act.
This amount would translate to Sh33 million a year against the county government's demand of Sh3.1 billion a year.
Tata Chemicals says it should be exempted from the Finance Act’s land rate charges because, in any case, they have spent Sh276 million (or 3.5 per cent of their revenue) on corporate social responsibilities in the 2017/2018 financial year.
'Huge loans'
"Tata Chemicals is effectively a bankrupt company with huge loans to repay, only trading due to parent company support. It is in no condition to bear increases in land rates," says Mr Nair in the memo.
A meeting between Mr Lenku and his cabinet with Tata Chemicals' Indian top managers on Tuesday hit a deadlock after the company said it could not honour its land rate debts.
The crisis meeting had been convened after the county government locked up Tata Chemicals offices and clamped their coaches on January 11.
The county government shut down TATA chemicals Kajiado trans-shipment facility, paralysing the company operation.
County reinforcement officers padlocked the main entrance before kicking out the workers.
With the trans-shipment facility shut down, TATA chemicals cargo trains were stalled.
The commuter train launched last year from Magadi to Kajiado was blocked for four days.
Legal obligation
Governor Lenku has declared that Tata Chemicals must pay land rates as a legal obligation and as an indicator of goodwill to Kajiado residents.
He has also threatened to cut off the company's water supply, which is drawn from a community water source in Magadi Ward.
Tata Chemicals have a 60km fresh water pipeline from Nkurumani Springs to Magadi plant.
"They cannot substitute government taxes with CSR activities. If they pay the rates, we shall trade. If they can’t, then they should ship out.
"They are dishonest that they are bankrupt. They indicate their revenues are almost Sh8 billion," Governor Lenku said.
He said the host community has been exploited by the Indian investors for many years and he would protect them and ensure they have a rightful share of their natural resources.
The soda ash extractor operates in the UK, USA, India and Kenya and has a capacity of processing 4 million tonnes of soda ash.
The county government's onslaught on taxes defaulters also targets the troubled East Africa Portland Cement Company #ticker:EAPCC and Jamii Bora Trust housing project.
The county government is demanding Sh85 million from the cement manufacturer on land rates and more than 100 million from Jamii Bora.
Meanwhile, the Kajiado County government has set up an independent revenue department reporting directly to the governor to seal corruption loopholes and boost revenue collection.
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