Treasury CS Ndung'u defends cooking oil import, cites drought

An attendant arranges cooking oil at Mama Watoto Supermarket in Kakamega town. [File, Standard]

Treasury Cabinet Secretary Njuguna Ndung'u has defended the government's decision to import 125,000 tons of cooking oil.

Prof Ndung'u, in his reply to a case filed by the Law Society of Kenya, stated that the Cabinet allowed Kenya National Trading Corporation to import oil, beans and rice as the country is experiencing prolonged drought.

Although the government had not declared the drought a calamity, Ndung'u in papers filed before High Court judge John Chigiti said the Kenya Kwanza administration's intervention was prompted by a national disaster to seek commodities outside.

He also claimed the price of oil, rice, and beans had escalated and was unaffordable for most Kenyans.

"The government has a responsibility of taking action to cushion the citizens," he argued adding that the idea was to have reasonable prices on the shelves.

He also told the court that the Cabinet had settled on KNTC to import the oil duty-free and ought to sell the same at a reduced price.

He said: "The government acted in utmost good faith by allowing KNTC, which is a government institution to import the food commodities duty-free to cushion Kenyans by selling at reduced prices," he said.

KNTC chief executive Pamela Mutua on the other hand told the court that the Public Procurement Regulatory Authority (PPRA) clarified that it did not need to follow the procurement process as the goods procured were not meant for internal use.

Ms Mutua was also replying to the claim. She added that KNTC ought to sell the items at a profit but help Kenyans save a few coins.

According to her, KNTC could not source the oil locally owing to the competitive environment and consumers demanding specific brands.

To her, following procurement law will be a disadvantage to the corporation as it will lock it out of the competitive margins.

"The application of the public procurement and asset disposal law poses a challenge in achieving the two objectives, especially with regard to its ability to compete in the market sector with other competitors. In the event that the Corporation uses public money to source for the trading items, the money will be recouped with a profit margin from the resale of the items during the business trading period," said Mutua.

In the case, LSK argued that the government is killing edible oil businesses in Kenya.

The lawyers' lobby argued that the decision to import edible oil will in effect lead to shut down of local factories that are paying high taxes to produce the same oil.

LSK lawyer Denis Odero said it is ironic and absurd for the government to hike the cost of electricity and Value Added Tax on locally manufactured products while running abroad to source similar products duty-free.

Odero told the judge that Kenya has no state of emergency or severe shortage to warrant the importation of duty-free cooking oil as the same is readily available from local producers.

"The respondents have not demonstrated that the country lacks edible oil, or that manufacturers are unable to meet the demand for edible oil in the country. In effect, the duty-free importation of finished edible oils into the Kenyan market will drive edible oil manufacturers in Kenya out of business since their products," argued Odero.

He stated that the government has failed to control the prices of essential commodities locally in order to secure their availability at reasonable prices.

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