REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIR

MILIMANI LAW COURTS

CONSTITUTIONAL AND HUMAN RIGHTS DIVISI

PETITION NO. 143 03 2014

(CONSOLIDATED WITH PETITION NO. 142 OF 2014 AND JUDICIAL REVIEW APPLICATION

NO.142 OF 2014)

-BETWEEN-

OKIYA OMTAT AH OKOITI. 1ST PETITIONER

BALKRISHMA RAMJI DEVAN .......................................................................................•. 2ND PETITIONER

PELICAN SIGNS LIMITED .....................................................................•......................... 3RD PETITION ER

PETER KUGURU.............................................................................................................•. 4TH PETITIONER

-VERSUS-

NAIROBI..C1TY COUNTY o< ••••••••••••••••••••••• 0< •••••••••••••••••••••••••••••••••••• 1ST RESPONDENT

"MINISTRY OF ENVIRONMENT, WATER AND NATURAL RESOURCES 2ND RESPONDENT. RD

WATER SERVICES REGULATORY BOARD. ,. 0 •••••••••••••••••••••••••••••••••••••••••••• 3 RESPONDENT

ATHI WATER SERViCES BOARD ..............................................................................•.. .4TH RESPONDENT

THE NAIROBI CITY WATER SEWERAGE COMPANY L1MITED STH RESPONDENT

GEORGE ALADW A........................................................................................................• 6TH RESPONDENT

REPLYING AFFIDAVIT FOR AND ON BEHALF OF THE 4TH RESPONDENT

(ATHI WATER SERVICES BOARD)

I, CLEMENT MUGAMBI, a resident of Nairobi County and of Post Office Box Number 45283-

00100, Nairobi, in the Republic of Kenya do hereby make oath and state as follows:-

1. THAT I am the Legal Manager of the 4th Respondent herein, Athi Water Services

Board, well conversant with the facts of the Petition herein, duly authorised to

and hence competent to swear this Affidavit for and on behalf of the

4th Respondent.

2. THAT I have read and had explained to me, by our Advocates on record and I have

understood the contents of the Petitioner's Petition No. 143 of 2014 brought under

the Certificate of Urgency of Ishmael Ngaring'a dated 31st March, 2014 supported

by the Affidavit of Okiya Omtatah Okoiti., as well as the Supplementary Affidavit of

Okiya Omtatah Okoiti sworn on the 5th May, 2014; and I hereby reply to both as

herein under.

3. THAT pursuant to the Sixth Schedule of the Constitution of Kenya, Part 2, section

7(1), all law in force immediately before the effective date continues to be in

force and shall be construed with such alterations, adaptations, qualifications and

exceptions necessary to bring it into conformity with the Constitution.

4. THAT from the foregoing, the governing law relating to water remains the Water

Act (Act No. 8 of 2002). This Act however has to be construed with such

alterations, adaptations, qualifications and exceptions necessary to bring it into

conformity with the Constitution.

5. THAT under the Water Act., 2002, the 4th Respondent is licensed by the Water

Services Regulatory Board (WASREB) to be, responsible for the efficient and

economical provision of water services within the counties of Kiambu and Nairobi

City, and Gatanga District in Murang'a County ..

.·6. THAT pursuant to Section 53 and 55 of the Water Ad, 2002 and with the approval

of WASREB, the 4th Respondent contracted the 5th Respondent, Nairobi Water &

Sewerage Company Limited, as its agent for providing water services in Nairobi

City County.

7. THAT the arrangement between the 4th and 5th Respondents is crystallized in a

Service Provision Agreement (SPA) a copy of which is annexed hereto and marked

'CM-1'.

8. THAT the SPA is the principal document regulating the provision of water and

sanitation services in Nairobi City County in that:-

a. It crystallizes the status of the 5th Respondent as a Water Service Provider.

Without this instrument, the 5th Respondent is a shell company with no actual

business because its principal object is that of providing services, which it

cannot do without this instrument.

·1.

b. The provision of water services to the public is a regulated service. This

instrument provides the framework for the regulation of this service. Without

this instrument, the industry would fall into chaos.

c. BecauseWater is a right, it must be provided in a manner that promotes the

prorgressive realization of this right. This instrument provides the performance

targets and service standards that must be met by the 5th Respondent.

d. Because water is a monopoly with no equivalent, its pricing, customer

management and the use of consumer charges must be controlled by

regulation. This instrument provides a framework for tariff reviews and the use

and allocation of monies collected from consumers.

9. THAT the following are the pertinent Articles in the SPA relevant to' these

Petitions: -' ,

. a. Article 2.3(a) of the General Conditions to the SPAp~ovide that the guidelines;., . .

and standards issued by WASREBunder the Water Act, 2002 shall b~ binding on

the parties and the SPAshall be interpreted in such a way as to be consistent

with such guidelines.

b. Paragraph 3 of the Special Conditions to SPAadds Article 1.1 (e) in which the

5th Respondent warrants that it shall, at all times, adhere to the Corporate

Governance Guidelines issued by WASREB, when constituting the 5th

Respondent's Board of Directors.

c. Paragraph 3 of the Special Conditions to the SPAadds Article 1.1 (h) in which

the 5th Respondent warrants that it will not alter, amend, interpret or

implement its Memorandum of Objects and Articles of Association in a manner

as to cause it to be in breach of its obligations under the SPA, the Water Act,

2002, or any applicable regulation.

Page 3 of9

5

d. Paragraph 3 of the Special Conditions to the SPA adds Article 1.1(i) in which

the 5th Respondent warrants that it shall invite the 4th Respondent as the

licensee in all its Annual General Meetings and Special General Meetings, as an

observer.

e. Paragraph 4 of the Special Conditions to the SPAadds an undertaking to Article

2.3(b) to the effect that the 5th Respondent shall amend its Memorandum of

Objects and Articles of Association within one year after execution of the SPA

so as to comply with the water sector guidelines to the following effect:-

i. To provide to the directors retirement on a rotational basis;

ii. To provide for the appointment of the directors through a transparent

and competitive process; and

iii. To provide for the representation of the various stakeholders in the

Board so that no single stakeholder is able to dominate the Board.

f. Paragraph 16 of the Special. Conditions; ~o the SPA adds the following provision.

to Article 20 'with regard to the 5th Respondent: 'The Provider is, by virtue of

being incorporated by a public entity to provide functions that would

. , ._ otherwise be provided by Q public entity, considered a public entity and shall.. " .. ' ,

at all times abide by the applicable. guidelines and regulations governing

public entities. "

g. Paragraph 18 of the Special Conditions to the SPA adds Article 25 to the SPA

and sub-article (b) thereof provides that "Though this agreement is considered

complete in its terms and conditions, the parties nevertheless agree that the

Licensee shall be consulted in the event of the occurrence of any event that is

not anticipated herein and the Licensee's instructions and/or guidelines with

regard thereto shall be respected and implemented, provided always that the

Licensee will endeavor to consult other stakeholders in reaching its decision."

10. THAT in granting its approval to the SPAbetween the 4th and 5th Respondents, the

3rd Respondent issued some Conditions of Approval (which form part of SPA by

incorporation) of which the following are the pertinent paragraphs relevant to

these Petitions:-

a. Paragraph 15 (a) of the Conditions of Approval notes that the Board of the 5th

Respondent did not meet the WASREBgovernance standards. The paragraph

further provides that all vacancies in the Board of the 5th Respondent occurring

after the General Election of 4th March 2013 shall filled using competitive

criteria.

b. Paragraph 15 (b) of the Conditions of Approval makes it a material condition of

the SPAfor the 5th Respondent to interpret its mandate in a manner that is

prejudicial to the water services sector.

c. Paragraph 15 (c) of the Conditions of Approval obligate the 4th Respondent to

submit the proposals for the amendments of the Memorandum and Articles of

Association of the 5th Respondent to the County Executive Member for Nairobi

City County for approval/ratification.

11. THAT I am aware that Legal Notice No. 177 of 9th August, 2013 (annexed hereto

and marked 'CM-2'), the Transition Authority approved the transfer of certain

functions named ,in, the schedule to that Notice, to the' County Government of

Nairobi ,City and; in particular, Clause 10 (b) tran'sferred the following works and

services, namely:··

"Water and sanitation services including rural water and sanitation

services, provision of water and sanitation services in small and medium

towns without formal service providers, water harvesting (specific to

counties), urban water and sanitation services with formal service

provision including water, sanitation and sewerage companies,

excluding Water Service Boards, Water Services Regulatory Board and

Water Resources Management Authority. "

12. THAT I am aware that Legal Notice No. 177 of 9th August, 2013 does not provide

for any transitional rules or modalities on how the transfer of 'urban water and

sanitation services with formal service provision including water, sanitation and

sewerage companies', particularly the transition of the responsibilities bestowed

on the 4th Respondent in the SPA,is to be effected.

~i.I

.(I 13. THAT I am also aware that in recognition of the above lacunae, the Cabinet

Secretary in the Ministry of Environment, Water and Natural Resources, in

consultation with the Governor for the Nairobi City County, constituted a taskforce

committee to advice on the re-organization of water services in the County of

Nairobi City.

14. THAT one of the Terms of Reference for this committee was to 'propose

transitional mechanisms for the provision of water and sanitation services to the

national and Nairobi City County Government' (annexed hereto and marked 'CM

3(a)' and 'CM 3(b)'is a copy of a letter by the Cabinet Secretary to the Nairobi

City County Governor dated 8th July 2013 advising on the general policy in the

water sector under the devolved system of Government and a copy of the letter by

the Nairobi City County Governor appointing the Taskforce dated 20th September

2013, respectively).

15. THAT my understanding of the import of all the above provisions of the law,

contract and policy is as follows:

. a. That the Water Act, 2002 is deemed to have been amended by transferring

the function of the provision of water and sanitation -services from Water

Services Boards to the County Governments.

b. That the ownership of the Water Companies previously incorporated by the

Local Authorities is deemed to have been transferred to the County

Governments by operation of law.

c. That the County Governments are deemed to have stepped into the

responsibilities of the Water Services Board with regard to the provision of

water services, the contracting of Water Service Providers and their

supervision.

d. That given the complexity and nature of responsibilities of the Water

Services Boards under the SPA the transitional mechanisms for transferring

the function of water and sanitation services from the National to the

County Governments should be a consultative process so to avoid any

disruption in service provision and ensure that the Counties have the

necessary structures and capacity to assume their new responsibilities.

e. That pending full transfer of the function of water and sanitation services,

the SPA remains a critical instrument for regulating the relationship

between the County Government, the Water Services Boards and the water

Service Providers for purposes of ensuring and maintaining a seamless

transition of the functions as aforesaid.

f. That the SPA and the Corporate Governance Guidelines issued by WASREB

provide for best industry practices for utility governance in the water

sector.

g. That the Corporate Governance Guidelines are intended to promote good

governance in the water sector and provide for a joint and consultative

process in the appointment of Directors of water utilities such as the 5th

Respondent, that is participatory, transpClrent, competitive and

accountable.

h. That there is nothing 'in the SPA or the Corporate Governance Guidelines

which is patently in breach of the Constitution or inimical to the legal

mandate of the 1st Respondent and there being no other instrument or

county law regulating the governance of water utilities in Kenya at the

moment, the SPAremains the principal document regulating the conduct of

the 5th Respondent in a regulated industry.

i. That being a State Organ and a Public Entity respectively, the 1st and 5th

Respondents are bound by Article 10 of the Constitution, and in particular,

the promotion of public participation, good governance, transparency and

accountability.

THAT based on the above understanding, the 4th Respondent has advised on the

amendments that need to be made to the Memorandum and Articles of Association

of the 5th Respondent so as to comply with the water sector guidelines on

corporate governance, and provided the Nairobi City County Government with the

procedure for the appointment of the Board of Directors of the 5th Respondent

that accords with the law, good governance and best utility practices (annexed

hereto and marked 'CM-4 is copy of our advisory to the County Government on this

matter dated 9th April 2004).

17. THAT the 4th Respondent did not participate in the Company's Annual General

Meeting at which the subject Directors herein were appointed and is neither privy

to the proceedings of that meeting and/or the appointments made thereat, nor

the process that was followed in arriving at the appointments.

18. THAT what is stated hereinabove is true and to the best of my knowledge,

information and belief.

~SWORN at NAIROBI thisL q day of '\V\f\'I 2014by the said aforesaid CLEMENT MUGbefore me: - i.{.

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