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State appeals to High Court to lift edible oil import freeze valued at Sh17 billion

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The government has called upon the High Court to revoke an injunction that has halted the import of 125,000 tons of edible oil. The government asserts that the current freeze on imports could result in a staggering loss of Sh17 billion, a sum that has already been disbursed to suppliers.

The government’s argument is based on the perishable nature of the goods, which are currently stored at a depot in Mombasa. Senior counsel Ahmednasir Abdullahi, representing the government, warned that any further delay in releasing the goods could lead to their spoilage.

The High Court initially halted the oil importation in June, acting on a petition filed by the Law Society of Kenya (LSK). The LSK argued that the decision to grant duty-free import privileges to the Kenya National Trading Corporation (KNTC) lacked rationale.

Treasury CS Njuguna Ndung’u defended the decision, explaining that the permission granted to KNTC in a letter dated January 20, 2023, was legally justified. Ndung’u emphasized that the importation aimed to mitigate the effects of an extended drought and the resultant food scarcity.

Lawyer Ahmednasir Abdullahi, representing KNTC, stressed that the injunction had inflicted undue hardship and that the prolonged storage of perishable goods could result in a massive Sh17 billion loss.

The government contended that the edible oil import adhered to both domestic and regional laws, particularly the East African Customs Cooperation Act of 2004.

In the letter dated January 20, 2023, Treasury PS Chris Kiptoo granted KNTC duty-free importation privileges for 125,000 tons of cooking oil over a one-year period. The LSK, however, asserted that this letter violated various constitutional provisions as well as the Fair Administration Action and Price Control (Essential Commodities) Acts.

The LSK is urging the court to compel the government to adhere to the law when seeking exemptions or waivers for import duties and taxes. The LSK’s contention is that the government’s decision exceeded its powers, lacked rationale, and amounted to an abuse of authority.

The government defended KNTC, characterizing it as a company authorized to procure goods for trading purposes outside the framework of public procurement regulations.

Questioning the LSK’s approach, the government pointed out the selective nature of the petition, focusing solely on edible oil while other products like wheat, rice, sugar, and beans were included in the State-issued letter.

The LSK is advocating for the court to deny the application for lifting the injunction, arguing that doing so would disadvantage local manufacturers who would have to compete with the State-owned corporation.

The lawyers’ body further asserted that the Treasury PS lacked the power or authority to instruct the Kenya Revenue Authority to grant exemptions to KNTC.

The final decision on this matter is expected to be made by Justice John Chigiti on September 1st.