Four petitioners filed a case in Kenya’s high court to stop a government plan to nationalize the importation of petroleum products, saying it violates the constitution.
This week’s filing comes after the Ministry of Energy advanced a government-to-government deal to take over fuel imports from private companies. This would effectively block non-public providers such as Oryx Energies and Vivo Energy.
High Court judge Richard Mwongo on Friday adjourned the case to March 14 and transferred it from Kerugoya to the capital, Nairobi.
The plan “fails the primary test of fairness, equality,” according to court documents filed by Ndegwa & Ndegwa Advocates on behalf of the petitioners. They asked the court to find the proposal unconstitutional and in violation of procurement rules.
If enacted, the policy change would include terms that would allow the state to make payments after at least six months instead of one week currently, according to Energy Secretary Davis Chirchir. The government designed the policy to help ease pressure on Kenya’s foreign exchange reserves, which have fallen to the equivalent of less than four months of import cover.
Under the plan, Kenya will seek a $4.8 billion credit line from lenders including KCB Bank, Standard Bank Group and Abu Dhabi Commercial Bank to secure fuel and defer cargo payments. The government wants to start importing under the new system in the April-May supply round.
The move “looks like an unfair practice as an impermissible representation that is unduly one-sided” and favors the supplier over the consumer, the petitioners argued. The government should have negotiated how to stabilize its dollar reserves “without having to frustrate” oil marketing companies and “technically drive them out of business”, they said.
