A gas deal worth US$1 billion between Kenya and Qatar forced President Uhuru Kenyatta to use his executive authority to pay the Sh1.4 billion Anglo Leasing bills, Says information sources
We also established that long before circumstances forced the President to use his executive authority, National Treasury Cabinet Secretary Henry Rotich and Attorney-General Githu Muigai signed an agreement to pay Universal Satspace and First Mercantile US$8 million and US$8.3 million respectively before April 28 in letters dated April 3, 2014, prepared by company lawyer M.M. A. Malik.
According to a top Office of the President (OP) official who did not want to be named because he was not authorised to speak to the media, Mr Rotich called President Kenyatta when the talks were going on to inform him that Kenya’s credit worthiness was being questioned during the signing ceremony last week.
“He is said to have told the President that the question of whether Kenya can pay US$1 billion when they have difficulties paying US$16 million Anglo Leasing bills came up. He is said to have told the President that the ball was not in his court since he has done everything required of him as Cabinet Secretary,” says the top OP officer.
On Saturday, President Kenyatta’s spokesman Manoah Esipisu said the government does not discuss details of negotiations.
“We do not discuss details of our negotiations, be they in reference to gas or anything else. We focus on results and we make this available to the public. The one fact I can emphasise is that government is committed to reducing electricity prices by at least 40 per cent over 36 months and it will do so,” Mr Esipisu said in a telephone conversation.
According to US$1 billion cheap gas deal with Qatar, Kenya will import 1 million metric tonnes of natural gas from Qatar to run 700 megawatt power plants in Mombasa and Lamu. The power plants will add 5,000 megawatts to the national grid.
Under the agreements negotiated by Mr Rotich and Energy Cabinet Secretary Davis Chirchir, Kenya will convert gas to electricity at less than 10 cents per kilowatt/hour. This is a fraction of the current electricity generation of 25 cents per kilowatt/hour.
The alleged faltering gas deal plus a situation where government was penalised Sh740 million for rescheduling a syndicated loan payment due on May 15 for three months and the country’s inability to execute Sh264 billion Euro bond was the trigger for the President.
The Euro bond was stuck due to 2009 and 2013 court decisions requiring that government pays Anglo Leasing bills.
“The National Treasury has had to extend the period for the syndicated loan that is due today (May 15, 2014) for three months at a cost of $1.2 billion, being the extension fee of $6.6 million and interest for the three months of approximately $5.4 million,” says a brief from National Treasury
The crisis led to President Kenyatta to hold a meeting with the Parliamentary Budget Committee led by Chairman Mutava Musyimi at State House where he told them that he had decided to use his executive authority to pay the bills after giving them adequate time to discuss and resolve the matter in vain.
Yesterday, Suba MP John Mbadi, who is a member of the committee, confirmed that the meeting took place but he did not attend.
“We were informed by the committee chairman that we have an appointment with the President. However, I refused to attend because I did not see the need since Parliament is supposed to act independently of the executive,” said Mr Mbadi in a cellphone conversation.
We established that 50 MPs endorsed the President’s decision after he explained to them. President Kenyatta went ahead to hold a press conference where he said he had no choice but to pay and blamed Sheria House.
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