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Kebs error to cost taxpayers Sh2b

BUSINESS NEWS
By Frankline Sunday | March 19th 2021
A front view of the Kenya Bureau of Standards headquarters. [Courtesy]

Taxpayers will pay Sh2.2 billion to a foreign company following the government’s cancellation of an oil inspection contract nine years ago. 

The Supreme Court yesterday threw out a motion by Kebs to review a judgement passed last year that found the standards body liable for breach of contract with Geo-Chem Middle East and upheld the award determined by an arbitrator in 2015.    

“It is clear to us that the application before us is a disguised appeal, which seeks to re-open matters already determined with finality by this court,” said the Supreme Court in its ruling earlier this week. 

“An application for review was not intended to give a party an opportunity to appeal or relitigate its case. Where such a review is sought, an applicant must lay a basis to the satisfaction of the court that the application for review satisfies the set criteria.”

The case dates back to 2009 when the State agency said it would commence inspection and testing of imported petroleum products and awarded Geo-chem Middle East the tender. 

Geo-chem said it established a petroleum inspection facility at the Port of Mombasa that was launched in August 2009 and begun offering the services to oil marketers on behalf of Kebs.

Four months later, when Geo-Chem sought payment for its services, Kebs asked the Kenya Revenue Authority (KRA) to collect inspection fees from oil marketers on its behalf. 

Court filings say KRA collected the oil inspection levy and deposited the money with the National Treasury between March 1, 2010 and March 1, 2012.  According to the court documents, Kebs did not remit the funds to Geo-Chem.

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In March 2012, three months to the lapse of the three-year contract, Kebs wrote to Geo-Chem saying the government had suspended the contract until further notice, prompting the firm to file a claim through arbitration. 

Geo-chem sought Sh248 million in unpaid invoices, Sh46 million used in setting up a laboratory, Sh120 million in operational expenses and Sh1.6 billion in lost income plus interest.

 

 

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