14 July 2014

Kenya: NCPB Loses Maize Tender Appeal, to Pay Sh267 Million

NATIONAL Cereals and Produce Board has lost an appeal it filed disputing the demand of Sh267 million by Erad Supplier.

The Court of Appeal on Thursday compelled the stated owned cereals dealer to pay Erad the amount following a High Court order which had been made earlier in favour of the firm.

Appellant judges Roselyne Nambuye, Patrick Kiage and Gatembu Kairu, ruled that NCPB did not demonstrate why it wanted the court to rule in its favour.

"Given the considerations before us. we are not persuaded that the applicant has made enough demonstration to prove its case......The application is therefore dismissed," the ruling read.

Before NCP appealed, Erad was awarded the amount after an arbitrator found that board was in breach of an agreement in which the company was contracted to supply 40,000 metric tonnes of white maize in 2004.

However before Erad could carry out the work, NCPB is said to have failed to issue letters of credit to enable it import the maize as indicated in the contract. As a result of breach of contract, Erad claimed loss of profit and storage costs which culminated in arbitration.

Arbitrator Evans Thiga had ruled in favour of Erad and awarded it Sh564 million saying NCPB breached the contract by deciding to amend agreements.

"Throughout the evidence, I was unable to find any breach of the contract by Erad. In fact the party in breach was NCPB for failing to perform its part of the contract," Thiga said.

However, the board was not satisfied with the decision and moved to the High Court before judge Leonard Njagi who ruled in favour of Erad a ruling the appeal court upheld.

NCPB in its defence accused the arbitration board of bias as it did not consider its case as the company that Erad had contracted to supply it with maize, Ropack CC International, does not in fact deal in maize business.

The board said it is registered with South African Department of Trade and Industry to offer financial intermediation, insurance, real estate and business services.

If further said that the company which Erad claimed for storage charges, Chelsea Freight, is registered for air transport.

Erad Suppliers is associated with Nairobi businessman Jacob Juma.

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