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Salt firm to pay State agency Sh185m for use of sea water

A Mombasa-based salt company has been ordered to pay a State agency more than Sh185 million for using seawater for commercial production of the commodity.

The Court of Appeal directed Krystalline Salt Limited to pay the Water Resource Management Authority (Warma) for pumping seawater from the creek in the Malindi area to dams and then to its private parcels of land for salt extraction.

The authority sued the company in 2017, demanding more than Sh2 billion, stating that the firm abstracts large volumes of seawater for commercial production of salt.

The amount was for water use charges for nine-and-a-half years between October 2007 and March 2017.

A bench of three judges of the appellate court reduced the amount from Sh2 billion, instead adopting the annual salt production capacity of 350,000 tonnes that the company had stated on its official website.

“At the rate of Sh530 per tonne, that amounts to Sh185,500,000,” said Justices Daniel Musinga, Hellen Omondi, and Grace Macharia-Ngenye.

The court was informed that the Kaysalt producer uses solar evaporation by trapping salty sea water into shallow ponds where the sun evaporates most of the water and concentrated brine precipitates the salt, which mechanical harvesting machines at Gongoni and Marereni areas in Malindi gather.

The court agreed with the agency that is a requirement under the repealed Water Act, 2002 and the Water Act, 2016, to develop principles, guidelines, and procedures to govern seawater usage.

In 2007, the firm acquired Mombasa Salt Works, formerly Fundisha Salt, the oldest salt works in Kenya, started by Germans in early 1920.

The court was informed that through a legal Notice of September 28, 2007, water use charges were gazetted, requiring water users to pay the respondent 50 cents/m3 for raw water abstracted for their use with effect from October 1, 2007.

Under the Rules, water users were required to submit a self-assessment form to the respondent, indicating their actual water use to enable the respondent to calculate the water use charges owing and due to it.

However, the authority submitted, that the company refused to comply, and it was compelled to estimate the amount of water used by the company to calculate the charges due.

According to Warma, it estimated that the company produced a minimum of 350,000 tonnes of salt per year, and the firm’s water use charges from October 2007 to March 2017 together with statutory interest amounted to Sh2.07 billion.

Further, the company was obligated to pay a fixed permit fee of Sh135,000 per year.

The company denied liability although it admitted that it is in the business of manufacturing salt and it uses seawater for that purpose.

The firm maintained that Warma has no power to develop principles, guidelines, or procedures for the use of seawater or to monitor or assess the use of seawater.

The salt maker further said only one cubic meter of seawater can’t produce one tonne of salt as alleged by the Authority and that the factual position was that one litre of seawater can only produce approximately 27.3gm of salt.

The firm said that it only manufactured 109,977tonnes of salt over the period between 2012 and 2013.

According to the firm, the water it uses is naturally collected on its private property, and the authority was not entitled to recover the alleged water use arrears.

“For the avoidance of doubt, we hold and find that the appellant is obligated to pay to the respondent Kshs.135,000 for fixed permit fees, and arrears for its use of seawater up to a maximum of Kshs.185,500,000 plus simple interest on the arrears at the rate of 2 percent per month from October 1, 2013, until the amount is paid in full,” the judges said.

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