Four companies have been accused of engaging in the salt business without licences for extraction and export permits, denying the government hundreds of millions of shillings in revenue.
The four companies -- Kensalt, Malindi salt, Krystalline Salt and Kurawa Industries whose managers appeared before the Public Accounts Committee (PAC) of the National Assembly yesterday, had a difficult time defending their actions.
Section 171 of the Mining Act of 2016, provides that exporting a mineral is only authorised by an export permit granted by the Cabinet secretary in charge.
This means that the companies were required to obtain an export permit for any export consignment of the salt since 2016 when the Mining Act came into force.
The illegal exports have been flagged by the Auditor-General in the 2018/19 report before parliament.
The report of the Auditor-General states that the government only pocketed Sh7.2 million and Sh74.42 million in mineral export levy and mining royalties respectively for the year under review.
The companies confirmed not having the export documents and when put to task, Mr Kibuti Mbogori, the general manager of Kensalt, said the salt his company was dealing in does not qualify as salt under the meaning of the Act.
The Act, he said, only recognises industrial or construction salt.
“The salt we are dealing with is neither used for industrial or construction minerals,” Mr Mbogori, whose company has been mining salt in the country since 1974, told the committee chaired by Ugunja MP Opiyo Wandayi.
However, Garissa Township MP Aden Duale and Mr Wandayi faulted Mr Mbogori for misleading the committee.
“You are operating in the country illegally. The first schedule of the Act lists salt that you are dealing in as a mineral. There are also regulations guiding the business. You will not be allowed to mislead this committee,” said Mr Duale.
Regulation 18 of the Mining Act (Dealings in Minerals) Regulations of 2017, provides that a person shall not export a mineral unless the person holds a permit granted by the Cabinet secretary.
Regulation 19 provides that a person shall not be qualified to apply for a permit to export minerals unless such a person is a holder of a mining licence, mining permit or a dealer’s permit.
The audit report notes that during the year under review, at least seven salt mining companies were operating in Kenya without mining licences and for which assessment for royalties due was not done.
The companies extracted the salt in the coastal region and sold their products locally and abroad without export permits, the audit says.
“Although it was indicated that the State Department had engaged the salt mining operators with a view to formalising their operations as provided for in the Mining Act, delay in formalising the operations hindered the collection of revenue from the companies,” the audit report says.
The other managers were Mr Mohamed Ali (Malindi Salt), Ms Hasmita Patel of Krystalline and Mohamed Hussein of Kurawa Industries.
“If your position is that the Act does not apply to you, then under what environment have you been operating?” asked Mr Wandayi.
He further demanded that the salt operators furnish the committee with details of exports made since 2016 when the law came into force. The details will include the amount of salt produced and sold locally and abroad, and its value.
This came as it emerged that the salt operators had ignored a letter from Mining Principal Secretary Kirimi Kaberia reminding them of the need to have licences for salt extraction and export permits.
“You were required to formalise your salt extraction operations by acquiring the necessary licences as provided under the Act. To date, you have not done so and your operations raise the question of legitimacy,” Mr Kaberia says in the June 15, 2019 letter to the four companies.
It continues; “It is expected that any future salt export will fully comply with the Mining Act and the Mining (dealings in Minerals) Regulations of 2017.”
Malindi Salt has been operating in the country since 1978, Krystalline Salt since 1988 and Kurawa Industries since 1976.