The Kenya Revenue Authority recently gave Kenya Power and Lighting Company Plc an ultimatum, ‘pay up, or we auction your transformers’.
The taxman through the Kenya Gazette notice has given Kenya Power 30 days to clear the transformers that were shipped into the country seven years ago.
The KRA auction is linked to delays by Kenya Power in clearing taxes for the import of the transformers and storage fees.
What is not immediately digestible for ordinary Kenyans, is why state agencies of the same govt would engage in legal fights.
The KPLC and KRA one is ugly, but there are more.
Energy Vultures
At the periphery, vultures are still circling the carcass, ready to pounce.
AP Moller, a Danish energy giant received a go-ahead to acquire a Thika-based thermal electricity generating plant from the Common Market for Eastern and Southern Africa (Comesa) Competition Commission.
This is the second such acquisition, an increase for AP Moller, which acquired Lungalunga road-based Iberafrica at a cost of Sh6 billion in 2020.
The Thika Power Plant with a power purchase agreement (PPA) running to 2034, has a generating capacity of 87 megawatts (MW).
AP Moller is in the process of acquiring the plant through its Africa Investment Fund (AIF) Holdings, which owns Iberafrica with a 52.5MW plant in Nairobi, the Comesa Competition Commission’s Committee Responsible for Initial Decisions (CID) said.
“The CID determined that the merger is not likely to substantially prevent or lessen competition in the Common Market or a substantial part of it, nor be contrary to the public interest,” said the committee in its determination.
“The CID further determined that the transaction is unlikely to negatively affect trade between member states. The CID, therefore, approved this transaction.”
The firm now awaits approval from Kenya regulators before taking over the power producer. AP Moller is getting into the country’s electricity production sector, acquiring thermal power plants at a time when they are under heavy scrutiny.
Working against each other
Back to state agencies working haphazardly, most times at the detriment of each other.
It seems that the 2020 directive by President Uhuru Kenyatta that parastatals and state agencies start using lawyers from the Attorney General’s office, fell on deaf ears.
Uhuru had also ordered the institutions to withdraw cases filed against each other within the same period.
It is only logical and makes a lot of economic sense for disputes between government agencies to be resolved and finalized by the Attorney General’s Office or by the Tribunal’s where the law demands. This may greatly reduce corruption and expenditure since the disputing parties are represented by Government paid lawyers.
Why didn’t the agencies listen to Uhuru? why is KRA and KPLC ugly fight even in public?
By detaining the transformers KRA has significantly slowed down the development of the country’s electricity distribution infrastructure. This has led to lost opportunities for generation of taxable and spending not only from Kenya Power but also from the potential consumers, e.g factories, businesses and households, which directly boosts KRA tax collections.
Instead on taking actions that have far-reaching negative effects on not only Kenya Power but also on the country’s economy KRA could have thrashed out a deal with to say offset its electricity bills against the duty due on the transformers.
Different state agencies must work together and not at each other.
What is important is creating bridges across silos, improving communication between departments and ensuring that they are working efficiently toward the same goals. For, ultimately, all public servants have the same goal: to improve the quality of life for citizens.
Instead of detaining the transformers for 7 years KRA should have released them and would have benefitted from the domino effect the expanded or improved electricity supply would created. The would be more businesses set up leading to increase in taxes both direct and indirect through more incomes and spending bring generated/ spent by citizens.
Over to you Justice John Mativo, this case has very far reaching ramifications on the development of Kenya and the lives of Kenyans.
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