HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept
{
"id": 240428,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/240428/?format=api",
"text_counter": 189,
"type": "speech",
"speaker_name": "Mr. Muturi",
"speaker_title": "",
"speaker": {
"id": 215,
"legal_name": "Justin Bedan Njoka Muturi",
"slug": "justin-muturi"
},
"content": "Mr. Temporary Deputy Speaker, Sir, from the foregoing, it is very clear that Parliament, not too long ago - in 2001 - when it was crafting this law, desired that KSB must be consulted - and it is mandatory - by the Minister for Agriculture whenever he felt like exercising his power to make regulations relating to production, manufacture, importation and marketing of sugar. It is not July 27, 2006 PARLIAMENTARY DEBATES 2443 optional. It is a mandatory requirement! Should the Minister wish - and that is why he is given the permissive \"may\" - to make regulations, he is then enjoined by law to consult the KSB. Therefore, in 2003, the Minister, in exercise of that power, issued out, in consultation with the Board, Legal Notice No.39 of 2003. Subsequent to that, various importers were invited. Indeed, both the Minister, his Permanent Secretary and the KSB appeared before the Committee on a number of occasions, and explained to us the various difficulties that were experienced by KSB which had spent, in the words of the Minister, over Kshs200 million in litigation arising from costs incurred in trying to defend the various suits that were filed by importers. Between 2003, 2004 and 2005, it became necessary for both the Kenya Sugar Board (KSB) and the Ministry of Agriculture to sit with the Office of the Attorney-General, to see how best to enforce those regulations or control the importation of duty-free sugar from within the Common Market for Eastern and Southern Africa (COMESA) region. Indeed, I want to confirm that on various occasions that the Committee met with the Minister, it did discuss at great length the pros and cons. It was a big problem because Legal Notice No.39 which advocated a free-for-all importation regime, landed the KSB and other importers, in court. The Minister and the KSB, in 2005, decided to go through the quota system. Again, the KSB found itself in court. A lot of sugar remained uncleared in various godowns at the Port of Mombasa, as the suits remained pending in courts. It was, therefore, a very trying moment for both the KSB and Ministry, to see how best to regulate these imports without necessarily breaching the law. We, as a Committee, encouraged both the KSB and Ministry, to engage in meetings; to try and find out how best they could streamline the importation of sugar. Mr. Temporary Deputy Speaker, Sir, I do not wish to read through the evidence that was given to the Committee by various witnesses, who included, but not limited to, Mr. Andrew Otieno, the Chief Executive of the KSB, the then Chairman of the KSB, Mr. Joseph Mbai, who on his own volition, offered to give his testimony on oath under the National Assembly Powers and Privileges Act; the Minister for Agriculture, Mr. Kipruto arap Kirwa; the Company Secretary and other officers of the Board. In order to put this matter into proper perspective, one will need to understand some background. As I indicated earlier on, both the Ministry and the KSB were, in our view, concerned about the litigation and costs arising from the implementation of the Legal Notice No.39 of 2003, which was, subsequently, supplemented by another Legal Notice No.1405 of 2005, issued by the Chief Executive of the KSB. We did encourage both the Minister and the KSB to see how best the costs arising from the implementation of this Legal Notice would be minimised. The KSB agreed that there was need to amend Legal Notice No.39 of 2003. Several options were considered; the free-for-all and quota systems. Various arguments did arise. One of them was that Kenya, being a signatory to the COMESA free trade area and other international conventions, having been allocated a quota of 200,000 metric tonnes to be imported duty-free up to the year 2008, to control who brought how much of that sugar would be going against the spirit of a liberalised market. The other counter-argument that was presented before the Committee was that Kenya gets 200,000 metric tonnes of sugar from the COMESA areas duty free. Therefore, it is the business of Kenya, as a sovereign entity, to decide that once we have 200,000 metric tonnes, COMESA cannot come now to dictate to us how this is going to be administered. That is the function of Kenya. It was, therefore, open both to the Ministry and the KSB to decide whether they would go quota way on the basis of first come, first served or free-for-all system. Therefore, on 10th November, 2005, at the instigation of the then Permanent Secretary, Mr. Ongwae, the Chairman, Vice-Chairman, Chief Executive and Corporation Secretary of the KSB were invited to Kilimo House, which is the headquarters of the Ministry of Agriculture, to a meeting, which was in the opinion of the then Chairman of the Board, an exploratory one. The purpose of the meeting was to try and see how best they were to address the issue of sugar imports for the year 2006. At that meeting, various options were considered. However, I have taken the liberty to say who from the KSB attended that meeting because of a technical issue that arose 2444 PARLIAMENTARY DEBATES July 27, 2006 subsequent to that. There were in attendance, the Permanent Secretary and other Government functionaries in that meeting. The meeting of 10th November, which the then Chairman of the KSB says he left midway, did not arrive at any particular conclusion. But quite surprisingly, the Company Secretary of the KSB purported to write a letter dated 14th November, indicating that a particular position had been arrived at. But in evidence, the Chief Executive denied any knowledge of that letter when he appeared before the Committee to give evidence on 8th and 9th February, 2006, when he was shown that letter. I will be demonstrating why this is important for everybody to understand. People should not be worried because it is part of my background. It was interesting that the Chief Executive purported that he did not know the contents of that letter. That letter is annexed there as an appendix, for those who may wish to look at it. Mr. Temporary Deputy Speaker, Sir, during the 58th meeting of the Kenya Sugar Board (KSB) which took place on 20th December, 2005, the management presented Board Paper No.35 of 2005, along the lines requested by the Board. Based on this, the Board resolved that the status quo on the administration of imports and exports as contained in Legal Notice No.39 of 2003, which was communicated to the parent Ministry, be maintained as earlier on resolved. Secondly, due to the build up of stocks in the sugar factories that was likely to result in a glut in the domestic market, the need for the Board to regulate the timing of the sugar inflows was more urgent now. Mr. Temporary Deputy Speaker, Sir, the Board met again in its 59th meeting on 11th January, 2006. It referred Paper No. 1 of 2006 to the Tender Committee of the Board to consider and make specific recommendations to the full Board on the modalities for quota allocation under a regulated regime. This was concluded at the 38th meeting of the Tender Committee which was held on 12th January, 2006, and detailed recommendations were made for the Board's adoption. This is a build up to what is really the issue today. Due to the urgency, the full Board observed on 20th December, 2005, that there was a need to urgently address the issue of regulating sugar inflows into the market. By December, 2005, when they appeared before the Public Investments Committee (PIC), they informed the Committee that there was a noticeable build-up in sugar stocks within the sugar factories. Therefore, that explains why the Board would meet on 11th January, refer the matter to its Tender Committee, which met on 12th January, 2006, and made detailed specific recommendations which the Board was to meet and consider on 13th January, which was a Friday. At that meeting, which was the 60th meeting of the Board, after considering the recommendations of the Tender Committee, they adopted the following procedures to be followed:- (i) That it will determine and make public vide a Gazette Notice our domestic needs for both refined and mill white sugar having taken into account the shortfall in the country. (ii) That it will make an application to the Treasury seeking exemption from the 28-day period requirement for advertisement of tenders, as it was constrained by time. (iii) That it would then issue a notice on or before 30th January, 2006, in the three main local daily newspapers; The Standard, Daily Nation and The Kenya Times, inviting all registered importers to come forward and apply for quotas, specifying the quantities and timings of actual entry by month with regard to the Treasury's approved advert time limits. (iv) That immediately the applications are closed, evaluation should be undertaken using the below listed criteria and the Tender Committee be convened to adjudicate accordingly. The results should be made public within 24 hours to avoid interference and lobbying. They indicated that:- (a) The importer qualification was mandatory. It has to verify the applicant against the register of importers to confirm that the candidate qualifies as such importer and eliminate any applicant who does not hold a valid import certificate. (b) Importer capability/resources which was to be awarded 50 per cent or 50 points. They indicated that this was to eliminate briefcase importers, examine and confirm that the applicant has the ability to import, peruse tender security/bank statements, audited accounts and establish ability July 27, 2006 PARLIAMENTARY DEBATES 2445 to raise the required funds to import within a specified period. (c) Past performance: This was to be awarded 20 per cent as points. The content of the applicant in the last quota to determine whether they followed the laid down rules or not, for example, whether one used the licence to import the wrong type of sugar or whether one imported without a valid import licence. For those who benefitted from the quota last year, they were to examine how much the applicant imported then. Secondly, the returns to confirm that they satisfactorily complied with the provisions of Regulation 7 of the Sugar (Imports, Exports and By- Products) regulations on filing of returns. (d) Storage, which was also to be awarded 20 points. Evidence of adequate storage facility, whether the owner owns a godown or it is a hired one, and their capacity vis-a-vis the quantity the applicant applies to import. (e) Tax Compliance, which was to be awarded 10 per cent. They were to examine the certificate of tax compliance from the Kenya Revenue Authority (KRA). Since the applicants are benefitting from tax-free imports, they must prove that they have always paid their taxes as required. In their deliberations, the Board decided that those who will qualify, in the interest of equity, a maximum allocation of 5,000 metric tonnes be applied. However, this quantity may be varied depending on the total number of applicants qualifying for the importation exercise. Based on the foregoing, the Board decided that it shall:- (i) Prepare and sell the tender documents at a non-refundable fee of Kshs10,000. (ii) Communicate the outcome to each applicant, both successful and unsuccessful. (iii) Communicate to the successful applicants, stating the quantity and month of importation, and consequence of non-compliance. (iv) Submit to the KRA a list of successful applicants after publishing the same in the"
}