Edible oil scam: CS Kuria says importations were done to protect Kenyans from cartels

The Trade CS has gone on an all-out war with sections of the media over press revelations detailing how companies owned by people with links to the government were single-sourced to procure edible oils through the Kenya National Trading Corporation (KNTC). 

In what appeared to be a response to the ongoing controversy over the importation of edible oils, Kuria retrieved and retweeted a tweet he posted in February this year, saying: “Until such a time when we will have a fully vertically integrated edible oils industry, the government will continue taking measured measures to protect consumers from powerful cartels that continue to fix high retail prices and raising the cost of living.”

It all began with the KNTC which falls under the Ministry of Investments, Trade and Industry getting the go-ahead from Cabinet in October last year.

The Cabinet memo stated: “To address the cost of living, Cabinet approved a framework to position the Kenya National Trading Corporation as the anchor of state initiatives to create a price stabilizer for essentials household food items.”

The memo continued, “KNTC will leverage on its infrastructure and capacity to help stabilize price swings of essential items that are abnormal and against the public interest.”

However, a document filed in the National Assembly shows that KNTC single-sourced companies contracted to import 125,000 metric tons of edible oil.

KNTC awarded Multi Commerce FCZ a Ksh.8.12 billion tender to supply vegetable oil and Shehena Company Limited to supply jerricans of edible oil at Ksh.1.33 billion.

To facilitate the subsequent imports, the Kenya Revenue Authority (KRA) used the Kenya Gazette notice number. 250.

But it turns out that this is a Gazette Notice issued by the government on the pullout on the 21st of November 2022 by the President to form the National Steering Committee on Drought Response.

In a circular that followed, the treasury indicated the quantities of edible oils to be imported as totalling 125,000 Metric Tonnes (MT).

1 metric tonne = 55 jericans, therefore, 125,000MT is equivalent to = 6,875,000 20-litre jericans.

To convert this to per container as indicated by Single Administrative Document in our possession translates to 1330 jerricans per container.

Therefore getting the number of containers: 6,875,000/1330 gives you 5169 containers.

However, three Single Administrative Documents have each different entries.

• The first document shows the importation of 26,600- 20-litre jeri cans translating to 20 containers.
• The second document shows the importation of 51,870 20-litre jeri cans translating to 39 containers.
• The third document shows the importation of 6,650 20-litre jeri cans which translates to 5 containers.

This brings the total number of containers carrying edible oil shipped into Kenya to 64. 

On the taxes, a KRA memo on the whole import plan stated: "The remissions and exemptions office shall facilitate the issuance of an exemption code to exempt 100% import duty, the other taxes, fees, and levies shall be payable as per the applicable laws…”

However, the Customs entry documents reveal that KNTC did not pay the following taxes amounting to 42.5% in taxes:

• Customs Duty – 35%
• Import Declaration Fees – 3.5%
• Railway Development Levy and – 2.0%
• Agricultural Food Authority Levy – 20%

On the whole edible oil import plan, this is nearly a $76 million (Ksh.10 billion) waiver in taxes that the Government granted to KNTC.

KRA which is pushing for more revenue will lose nearly Ksh.10 billion in revenue.

KRA and the  Kenya National Trading Corporation are yet to comment on the edible oils importation issue as questions mount over the transparency of the process and the public funds at stake.