Here is the news. I have come across correspondence from the Clerk of the National Assembly showing that the Departmental Committee of Energy has summoned the managing director of Kenya Pipeline Company (KPC) to interrogate him on the circumstances under which some Nigerian investors have been gifted a 31-year lease on land in Mombasa belonging to the Kenya Petroleum Refineries (KPRL).
As we know KPRL although very rich in terms of prime land is more or less moribund. In September 2023, the government directed KPC to take it over through transfer of shares making KPC its sole shareholder.
However, that process is yet to be completed to date and KPRL still exists legally as an entity albeit with a skeletal board and staff.
Although moribund, the Attorney General last year advised that the correct entity to lease land to the Nigerians was KPRL.
Nigeria’s Asharami Synergy Ltd has just been been gifted the land to ‘develop, construct, and operate a multibillion 30,000 tonne common user LPG handling and storage facility in Mombasa.
Leasing of public land comes with huge corruption risks. In contemporary anti-corruption literature, we read that when information about public land leases and PPP contracts is not readily available to the public, investors can exploit weak situations to acquire public land illegally.
Let’s wait to see what the investigations by the parliamentary committee will reveal.
Theory also teaches that without adequate transparency open bidding processes, the publishing of the financial and contractual details of investment proposals by private investors and without full transparency on beneficial ownership public officials can collude with investors to divest public land for personal gain.
I think that the Nigerian investors must be having some very powerful local political backers.
This is the inescapable conclusion I have arrived at after perusing voluminous documents provided to me this week by a whistleblower from the parliamentary oversight committee interrogating the deal.
First, the deal with the Nigerians has been signed without the mandatory consent of the Attorney General.
As a matter of fact, the correspondence reveal that comments and concerns raised by the AG were wilfully ignored.
Secondly, despite the fact that laws and regulations require that intention to lease public land must be published in the Kenya Gazette and that adequate time be given for public views and comments, this deal was signed within two days after the gazette notice. The deal was signed on April 6 while the gazette notice came out on April 8.
Thirdly, the Nigerians have not done an environmental Impact Study. From the documents I have seen, they are merely relying on a study that was conducted nearly seven years ago by KPC which-according to laws and regulations- needs to be re-validated. This is a big omission because construction of an LPG facility comes with huge implications for public safety.
I ask, why are we showering these Nigerians with liberal privileges including issuing letters of support and implicit guarantees to their financiers? There is nothing special in the new facility the Nigerians are proposing to build for us because this is not going to be the first privately built LPG terminal and storage facility to built in Kenya.
The Mombasa-based local industrialist Mr Mohammed Jaffer has over the years built expansive LPG handling facilities owned by the company AGOL and comprising a jetty located six kilometres away from the seashore, common user manifolds facilities, massive underground farm tanks, pumping stations and gantries. Mr Jaffer did not need a letter of support from the taxpayer.
This deal illustrates how investors are able to exploit ambiguity in the legal framework governing privatisation deals; private sector participation (PSPS) arrangements and public private partnerships (PPPs) deals.
I say so because going through the correspondence what was being negotiated with the Nigerians initially was a straightforward land lease.
The caption for the project was ‘lease of public land to a private sector participant. Somewhere along the line the document under negotiation was tweaked and the whole deal changed into a proposal for a PPP under the ‘build operate and transfer’ arrangement.
This is the route the negotiating parties exploited to qualify for letters of support implicit guarantees and to turn the project into a contingent liability on the taxpayer.
Parliament should cancel this deal. I read from the correspondence that long before the Nigerians came into the scene, KPC had progressed with the project up to completing front- end- engineering designs at a cost of Sh250 million.
One letter from a powerful player was enough to scuttle the original plan.
The Nigerians have been lobbying to be given the designs and the environmental study for free.
The writer is a former Managing Editor for The EastAfrican.
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