Govt moves to water down price controls

NAIROBI, Kenya, Sep 29 - The government has now moved to water down the Price Control Bill, 2009 that sought to regulate the prices of essential goods and protect Kenyans from perennial price fluctuations.

While rejecting the Bill, President Mwai Kibaki directed that Parliament make amendments by deleting specified goods the government shall control their prices and instead give the Minister powers to decide which goods at specified times he regards essential.

“The Minister may, from time to time, by order in the essential Gazette, declare any goods to be essential commodities for the purposes of this Act and determine the maximum prices of the commodities in consultation with the industry,” reads the amendments contained on Wednesday’s order paper.

This new provision reverses the powers in the original bill that had set out specific goods that are classified as essential goods which the Minister of trade will be obligated to control their prices. The Bill that was sponsored by Mathira MP had identified maize, maize flour, wheat, wheat flour and rice as essential. Others are rice, cooking fat, sugar; paraffin and petrol.

However in a move that could be seen as to weaken this power the: “Minister is supposed to take into account any relevant treaty or convention ratified by Kenya.”

“An order made to declare a commodity essential may contain the maximum order under price taking into account related costs of the said essential commodities in any area in Kenya,”

The Bill was passed by the House in June but President Kibaki declined to sign it into law saying that its provisions were against the principle of a free market and liberalisation.

In rejecting the Bill, the President said: "Apart from going against the policy of liberalisation, this clause also violates the fundamental principle of the World Trade Organization on national treatment of which Kenya is a contracting party."

The Head of State said his decision was based on Article Three of the WTO's General Agreement on Tariffs and Trade that warned that internal price control measures by contracting parties could be harmful.

"This obligation places a duty on Kenya to avoid measures including price controls, which would have prejudicial effects on other contracting parties supplying imported products to Kenya," President Kibaki said in his memorandum.

The President instead recommended that the Bill be amended to allow Finance Minister to only set maximum prices of gazetted essential commodities upon consultation with the concerned industry.

According to the Bill a person who sells or purchases any commodity and declared an essential good above the penalties maximum price, commits an offence and is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding five years, or to both

MPs were set to discuss the amendments later on Wednesday afternoon.