Oryx seeks Sh465m from Mastermind over halted project

Corporate News

Geoffrey Wahungu, National Environment Management Authority directo-general. The watchdog halted Oryx plant construction. PHOTO | FILE |  NATION MEDIA GROUP

By BRIAN WASUNA

In Summary

• The National Environment Management Authority (Nema) revoked the oil dealer’s Environmental Impact Assessment licence in 2013 following an appeal by Mastermind.
• Construction of the oil and gas storage plant was halted for the duration of the dispute.

Swiss oil manufacturer Oryx Energies has sued Mastermind Tobacco for $4.9 million (Sh465 million) that it allegedly lost when the construction of its Syokimau plant was halted during a land tussle between the two firms.

Oryx says Mastermind stopped the project midway, causing it to lose the amount which includes accrued interest on money it had borrowed to fund the project, insurance, security and other costs. The plant was to cost $5 million (Sh470 million).

The National Environment Management Authority (Nema) revoked the oil dealer’s Environmental Impact Assessment licence in 2013 following an appeal by Mastermind.

Oryx then moved to the High Court which last year ordered the environmental agency to issue it with the licence. Construction of the oil and gas storage plant was halted for the duration of the dispute.

Oryx reckons that the tobacco manufacturer’s appeal to the Nema tribunal was filed in November 2012, six months after the time provided for in law. Mastermind is yet to respond to the suit.

“As a direct result of Mastermind’s actions, the tribunal ordered the stoppage of all construction projects ongoing on the suit premises. Oryx is convinced that by filing the proceedings before the Nema tribunal, Mastermind was intent on damaging the plaintiff’s business,” Oryx says.

Justice Pauline Nyamweya ordered Nema to issue Oryx with the licence in August last year after she agreed with the oil dealer’s argument that the appeal was filed out of time.

The plant was to be commissioned in 2013, and Oryx says it would have earned a $2.3 million (Sh217 million) profit had its construction gone on as planned. The oil dealer adds that it spent $1.7 million (Sh160 million) procuring equipment for the project.

It further argues that Mastermind was aware that its appeal to the Nema tribunal was filed late, but that the tobacco manufacturer proceeded to challenge the licence’s validity.

The oil dealer’s objection before the Nema tribunal was struck out in a ruling delivered in January 2013, after which the firm moved to the High Court.

The oil dealer’s project manager Edward Rutto says in suit papers that Mastermind had in August 2012 agreed to air out its issues with the licence through a letter, and that it needed two weeks to do the same. It however went silent and instead filed the appeal two months later.

Mr Rutto adds that the project was 50 per cent complete when it was stopped.