Chinese firm now accuses MP of extortion

July 29, 2012 8:21 am
A letter from the firm to Energy Permanent Secretary Patrick Nyoike said the visit by the MP’s delegation was unscheduled/FILE

, NAIROBI, Kenya, Jul 29 – A Chinese firm is now accusing a Member of Parliament of extortion, after it was awarded concessions to mine coal in Kitui’s Mui Basin.

The Fenxi Mining Industry Company Limited says the legislator exhibited “unfriendly and undiplomatic behaviour,” while repeating “intimidating demands for special favours,” during a visit to its facilities in China a few months ago.

A letter from the firm to Energy Permanent Secretary Patrick Nyoike said the visit by the MP’s delegation was unscheduled.

“We were asked by the Government of Kenya, through the Ministry of Energy, to provide at short notice logistical support whilst the delegates were in China to provide appropriate channels for the delegates to familiarize themselves with coal operations,” said the letter signed by Fenxi Group’s Deputy Chairman Yang Wusheng.

The firm alleges that the legislator told several lies involving the Ministry of Energy lacking the authority to award the coal concession to Fenxi or any other company and that the firm had been taken for a ride.

“Some of his (MP’s) utterances were in the effect that only the community leaders of Blocks A and B have a right to award any concession and the delegation of Blocks A and B had visited China to carry out due diligence on Fenxi and decide if the company would qualify for award of the coal concessions,” the letter reads.

Over the past six months, four Kenyan delegations have visited China to inspect Fenxi’s facilities.

In August last year, Fenxi won bids for Coal Blocks C and D in Mui Basin for exploration, evaluation, extraction, development, production, processing, storage and disposal of coal.

During a press conference on the matter, Nyoike refuted the legislator’s allegations, but did not state what action would be taken against the lawmaker.

“What he is doing is wrong. Those two blocks are not in his area and we’re talking about Blocks A and B and his portion is very small. I think he wants to be governor so he has the whole terrain to himself,” he said.

The coal concessions will be signed in the next three months, pending approval from various government actors.

The government can participate at between 10 percent and 20percent of the process as equity holders, with the rest going to the firm.

Upon commercial discovery government can take its share and participate in field development.

“The government of Kenya has an option to take 11 percent. The government can decide whether to participate in the process or bequeath this to the county government of Kitui or other government organization or sell its rights to other parties,” Nyoike explained.

The revenue sharing ratios of natural resources between local communities, government and participating firms have not been defined in a legal framework.

However, Nyoike says a provision in a draft Bill by the Ministry of Environment and Mineral Resources should address this.

“The Treasury has invited the African Development Bank to help develop a fiscal, legal and regulatory framework for concessioning exploitation of our natural resources,” he said.

The Ministry of Energy is planning to explore coal deposits in Kwale and Kilifi counties.

The deposits there expected to help power the Mombasa coal-fired plant.


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