Clear guidelines should govern exploitation of mineral resources
Kitui County to a consortium comprising Chinese and a host of local companies may not exactly fit into illegality, but the process followed in awarding the tender evokes suspicion.
The Government awarded the contract to a consortium of companies led by Chinese firm, Fenxy Mining Industry and local company called Great Lakes Corporation, which according to a story appearing elsewhere in this paper is associated with a Dr George Kareithi.
Jointly, this consortium, which also includes other local companies with a shareholding structure too complex to go into here, has 89 per cent stake in the coal mining process in Blocks C and D in Mui Basin, Kitui County while the Government holds the remaining stake.
The consortium, through Dr Kareithi has sought to justify its ownership of the coal blocks on the premise that his firm only heeded government’s call for indigenous participation in the project.
Necessary conditions
This group of companies has insisted that it complied with all necessary conditions and payments, paying all the necessary licence fees including concession fees of Sh255 million ($3 million) for block C and Sh42.5 million ($500,000) for block D.
The question however is whether it is morally appropriate for public officers like Nyoike to defend the award of such potentially rich blocks and contracts to companies without subjecting them to a more competitive procurement process.
Without casting any aspersions, a competitive process eliminates unnecessary doubt and innuendo and is more likely to provide the best outcome for everybody involved, but only if handled professionally.
We don’t know much about the Chinese company and so cannot vouch for its reputation or even competence, but the Ministry of Energy, which awarded the contract, has come stoutly defended the deal in which Great Lakes Corporation was granted a stake on behalf of the local community.
What the deal means is that part of the land in Kitui has been licensed to, or is being solicited by this consortium for a mining project. This fact reflects the Government’s intention to turn the region and probably, other areas in the country with such potential into mining powerhouses. The objective is to provide cheaper energy for our economy and stimulate development in the mining sector.
While the objectives are noble, the process under which this license was granted is wanting. The nature of ownership of the firms involved in which individual owners are not provided, with companies holding stakes in other companies, gives them an undue advantage that would not be possible if more stringent rules were in place and enforced.
