- The Law Society of Kenya has moved to court seeking to stop the process arguing that it would deal a blistering blow to local manufacturers and occasion massive job losses.
- LSK projects that the Kenya Revenue Authority stands to forfeit close to Sh52 billion in tax revenue should the imports proceed.
Image: MARTIN MWITA
The plan to allow Kenya National Trading Corporation to import 125 million kilogrammes of cooking oil duty-free has run into legal hurdles.
The Law Society of Kenya has moved to court seeking to stop the process arguing that it would deal a blistering blow to local manufacturers and occasion massive job losses.
LSK projects that the Kenya Revenue Authority stands to forfeit close to Sh52 billion in tax revenue should the imports proceed.
“In effect, the duty-free importation of finished edible oils into the Kenyan market will drive edible oil manufacturers in Kenya out of business,” LSK states.
The argument, as espoused by LSK lawyer Denis Olonde, is that the products made locally wouldn’t get the same tax treatment as the imports.
“Their products, which are not being given the same tax treatment, will be more expensive and as such cannot compete with the prices of the products supplied by the KNTC,” Olonde said in his applying affidavit.
In its pleadings, the professional body wants the National Treasury, KRA, and KNTC restrained from importing or clearing or further approving the importation.
As such, LSK wants the court to quash the National Treasury letter dated January 20, 2023, which approved the duty-free importation of 125,000 tonnes of oil for a year.
LSK also wants to quash, the Kenya Revenue Authority’s circular of February 14, 2023, facilitating the duty-free clearance.
The lawyer’s body also wants a declaration that the importation violates the Constitution, Fair Administrative Actions Act, and the Price Control (Essential Commodities) Act.
“There will be runaway employment, loss of billions in tax revenues and depressed economic growth,” LSK argues.
LSK wants the matter expedited, arguing that “unless the leave and stay orders sought are granted immediately, the questions which the court is called upon to answer will be rendered nugatory”.
In a fast one on the matter, Justice John Chigiti on April 18 declared the matter as urgent, granting the lawyers their prayer that the case be expedited.
The judge has scheduled the matter for mention today [Thursday, April 20, 2023] for further directions, setting the timelines for service and replies.
“The application shall be heard by way of written submissions,” Justice Chigiti ordered, setting the stage for a speedy resolution of the case.
Manufacturers expressed their fury after the government moved to allow the importation of cooking fat and oil duty-free for one year.
They put the Ruto administration on the spot for waiving the import duty and the tariff rules in the East Africa Community common market.
KAM CEO Antony Mwangi was among the voices against the directive and termed the move a grave concern to the local manufacturing fraternity’.
Among the questions by concerned plays was why the plan was shrouded in secrecy unlike when duty-free sugar was allowed in the country.
The only notice which was made public was by Treasury Cabinet Secretary Prof Njuguna Ndungu dated December 23, 2022, and declared duty-free imports of sugar, maize and rice.
The State’s word has been that the imports were being allowed to help cushion Kenyans against the extremes of inflation staging the high cost of living.
Trade Cabinet Secretary Moses Kuria at that time argued that local manufacturers were importing edible oils and repackaging the same.
“Some of the so-called manufacturers have been importing oil and posing here as manufacturers. This is driving our country back to poverty,” the CS said.
For LSK in its case, the edible oils being imported into the local market are not relief goods or for any emergency use.
“The respondents have shown any emergency for edible oils in the country, or indicated any specific area where a natural calamity has occurred where the 125,000 tonnes of cooking fat will be applied,” Olonde avers in his affidavit.
He further argues that the government has not given any basis as to why the duty-free importation should apply for one year.
“It is therefore obvious that the respondents have sought to rely on the wrong provision of the law to circumvent the procedure for scrutiny and enactment of tax exemptions through Parliament.”
For LSK, the government has equally ignored the price control laws which permit it to control or regulate prices of essential commodities prices to ensure they are available at reasonable levels.
The lawyers’ other case is that there was no public participation in the decision to allow imports of duty-free edible oils.
“The government has taken the decision without consulting or involving edible oil manufacturers who have the capacity to supply edible oils at the same government-sanctioned subsidized prices if the same tax treatment were extended to them,” LSK avers.
The applicant further argues that KNTC has “compounded an illegality by procuring the importation of finished edible oils into Kenya in secrecy”.
LSK wants KNTC called out for seeking to import the goods without floating a tender or following the fair, equitable, transparent, competitive, and cost-effective framework provided in the Constitution and procurement law.
"The life of these proceedings is dependent on the application being heard on a priority basis."