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Will Tata finance Lenku’s downfall?

Pundits posit that the ongoing dispute between Tata Chemicals and the County Government could render Ole Lenku a one-term governor

By Jonathan Teikan

Vested political interests of local leaders, conflict of laws, and claims of monopoly are the main forces fueling a protracted conflict between the Kajiado County Government and Tata Chemicals Magadi Ltd, Kajiado Star can reveal.

The erstwhile allies, who in mid-last year jointly launched a passenger train service between Kajiado and Konza Techno city, have of late been embroiled in a bitter tussle over accrued land rates.

The devolved unit set the ball rolling when it demanded that the company pay Ksh17 billions in land rates, accumulated since 2013, for the over 200,000 acres it occupies in Magadi, Kajiado West Sub-County.

In response, Tata — Africa’s largest soda ash manufacturer — disputed the demand on grounds of an existing “gentleman’s agreement” with the former county government, nearly four years ago, and that the rates stipulated in the County Finance Bills would make their business unsustainable.

It further claimed that it was reeling in bankruptcy, save for the support of the parent company.

Governor Joseph ole Lenku, has however, maintained that the claim was “dishonest”.

The said “agreement” allegedly reduced the rate from Ksh14,000 — specified in the current Finance Act — to Ksh120 per acre. The Act states that land is charged land rates at Ksh14,000 annually per acre.

Following the disagreement, residents were taken through a spree of “high drama”: Ole Lenku, reportedly, threatened to cut off water supply to the company should it fail to pay the rates; on its part, the company — purportedly acting on the strength of a court order — demolished administrative county offices in Magadi town. The governor then ordered the company to close down its Kajiado town depot, for among other reasons contravening the Public Health Act. This was followed by the much-criticized move by Ole Lenku to lead residents into storming the company’s factory.

Amid the sideshows, on February 4, during a State House visit, county leaders led by the governor seized the opportunity to seek the attention of President Uhuru Kenyatta in the matter. Following the discussions, the president promised to look into their concerns with a view to finding an amicable solution.

“We want to welcome investors, but they must also do what is for the greater good of the community,” said the president after the meeting.

Residents who mainly rely on media reports and politicians’ statements during social gatherings were left with a myriad of unanswered questions: If the company has not been remitting its arrears since 2013, why was the previous government led by Dr David Nkedianye silent over the matter? Why is the vocal politician Tarayia ole Kores siding with the company?

Kores, a former Olkejuado county council chairman, has been opposed to the position of the governor that, “Tata must pay taxes or ship out.” Speaking to Kajiado Star on phone, Kores said, “I told Ole Lenku that Tata will go nowhere, but I still tell Tata waheshimu viongozi, locals na hatuombi; kuna sheria ya CDA ambayo lazima wafuate (Tata must respect locals and their leaders, and adhere to the terms of the CDA to the letter).”

The CDA is a Community Development Agreement arrived at between the Magadi community, Tata Chemicals Magadi, and the county government. It sets out conditions that ensure the mining of soda ash and related minerals in Magadi is consistent with the continued economic, social and cultural viability of the Community.

Kajiado Star has learnt that Tata has been playing a sinister role in county politics. Former chairman of the defunct Olkejuado County Council, Julius ole Ntayia, said in an exclusive interview that, “Since the time of the late Prof George Saitoti — the then MP of Kajiado North constituency — Tata has been playing a covert role to influence the politics of the day. They did so by way of sponsoring political campaigns of leaders whom they perceived to be dancing to their tune. Our attempts to reach to the company for a comment on this allegation were futile as phone calls and text messages went unanswered.

Ole Ntayia added: “Even today, a majority of political aspirants or even those who seek to defend their seats remain alive to this reality… and they purposely approach the company for support.”

According to Ole Ntayia, some leaders — especially those eyeing top political seats in the county in the next General Election — could tactfully remain noncommittal on the matter, ostensibly to exploit the circumstances for their political dividends.

The now renowned businessman further avers that “Governor Lenku is reputedly not easy to compromise, if at all, anyway, and his firm stand in fighting for the rights of the people can even cost him the seat come the next General Election, as the company could resort to financing the campaigns of his main competitor to get him out of office.”

His assertions, if they are anything to go by, could give credence to allegations made by Ole Lenku on February 9, during a homecoming of the County Secretary Samuel ole Seki, that, “When we visited Magadi Ward, women told us that, ‘you too will be compromised’, arguing that the former governor [Dr Nkedianye] and Ward Representatives were compromised [by the company]… I assure you that the current Assembly and myself would never be compromised.”

A member of the last regime’s executive who sought anonymity told this paper, “It could not be possible for Dr Nkedianye to get into an agreement that will out-rightly contravene a Finance Bill. In that case, then, the so-called gentleman’s agreement validates the accusations that he was compromised, hence his silence on the matter.” He added, “Tata could not argue in favour of violating local laws on the basis of a memorandum.”

According to court documents seen by Kajiado Star, Tata has argued that following “subsequent engagements and meetings between the Olkejuado County Council and the 1st Respondent [county government], it was agreed in 2014 that the Petitioner [Tata Chemicals] would be paying land rates to the First Respondent at the rate of Ksh120 per acre.”

The county government, through an affidavit sworn by then County Secretary Francis Sakuda, argued that it acted in accordance with, and within the purview of the Constitution, when it enacted the Kajiado County Finance Act, 2014 — an Act which provides for the revenue-raising measures of the county government.

Under the Act, industrial rates for 13 mining companies owning more than 11 acres of land each and operating within the county was fixed at Kshs14,000 per acre, an increase the company says was “untenable and unsustainable”.

Moreover, the company queried the legality of the Finance Bill, claiming that it has not been published in the Kenya Gazette “pursuant to the mandatory provisions of Article 199 (1) of the Constitution.”

Terming the allegation as being “without any basis”, the government averred that before the enactment of the Bill and its eventual gazettement, there was public participation, the aftermath of which saw the company filing a memorandum in the County Assembly on March 11, 2014 in opposition to the proposed rates and royalties. The submission was reportedly ignored by the Assembly.

To the reprieve of the county government, Justice Reuben Nyakundi ruled that the Kajiado County Finance Act, 2014, was validly enacted. In any case, the judge ruled, failure to gazette a county Bill could not render a legislation unlawful.

In another matter, the company also disputed the purported imposition and demand of royalties on soda ash at the rate of Ksh100 per tonne through its Finance Act 2018/19. It argued on the basis of Section 12 of the Mining Act, 2016, and Clause 4 of the lease, which provide that royalties are payable to the national government.

The county government, however, disowned having imposed or made the demand, and consequently termed the allegation “a deliberate or reckless falsehood under oath.”

In its determination, the court was in concurrence that the county government had not demanded royalties and had only charged royalties before the enactment of the Mining Act, 2016.

Surrender of land

Another aspect in contention was whether Tata Chemicals would surrender all the land currently not under use.  In the court documents, Tata railed that the local administration was “condemning” it to pay rates over a vast area of land on which it does not derive a benefit. Concomitantly, county minister for lands Hamilton Parseina is on record as saying: “They [Tata] should only retain what [land] they make good use of.”

That said, Tata is perceivably not willing to surrender the land for the reason, pundits postulate, that the company took a mortgage to buy a facility based on the assets — which included the entire land. In an attempt to cover up the issue of the loan, they further argue, the company was proffering all manner of “reasons” to retain the whole land.

Others however opine that Tata is unwilling to surrender the land using a claim of “uninterrupted right” in the 1928 and further 2004 leases, “to search for, dig, get, win and carry away all the Magadi deposit and for any other purposes of the demised premises.” The leases were dated March 20, 1928, and December 9, 2004, respectively.

It therefore follows that by releasing the land, the pundits further argue, it will be open for any other interested party to prospect minerals on the land, and possibly subsequent exploration.

It is speculated that there are oil deposits on the land, and the National Oil Corporation of Kenya has claimed to have conducted a seismic survey.

In his May 3, ruling, Justice Nyakundi referred the case to a “comprehensive consultative process” to be supervised by the court in conjunction with the John Munyes-led Ministry of Petroleum and Mining “with a view of negotiating the amount of land rates payable by the Petitioner [Tata] in the period since the commencement of the Kajiado County Finance Act, 2014 and distinguishing the exact acreage of land leased by the Petitioner, upon which the 1st Respondent may levy the agreed rates as a devolved function.”

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