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Economy

Justice Onesmus Makau. FILE PHOTO | NMG 

Taxpayers face a Sh2 billion loss after the State failed to defend a suit where a Nairobi-based manufacturer is seeking compensation following the ban on the use of plastic bags.

Trial judge Onesmus Makau said the suit will be concluded within a month or October 25 without hearing opposition for the compensation suit from the Attorney-General’s (AG) office.

This looks set to tilt the case in favour of Hi-Plast Limited, which further seeks an order to quash a Gazette notice by the Ministry of Environment, banning the use of plastic bags.

Justice Makau raised concern over the AG’s failure to file a defence for the suit and serve Hi-Plast with court papers detailing its opposition.

A representative from the AG’s office told the judge that the State was under the assumption that after the Kenya Association of Manufacturers (KAM) case against the plastic ban was thrown out the matter had rested and assumed “the new case compensation would equally fall.”

“The defendants have defaulted in entering appearance and further failed to file any appropriate defence,” Hi-Plast lawyer Eddy Orinda told the court.

The director of the company, Mahesh Dodhia says the ban has caused him losses, having invested heavily in machinery and raw materials as well as defaulted on loan repayments.

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In a sworn statement, he says that the ministry should have at least engaged stakeholders before imposing the ban, which would have helped mitigate the losses.

“The petitioner’s loans were to be repaid solely based on sales projections that were hinged on month on month output and sales of its products, which are now deemed illegal,” Mr Orinda said.

The firm also claims that the declaration of the ban and its implementation came after manufacturers were granted inadequate and unreasonable notice.

Hi-Plast accused the ministry of disregarding a parliamentary committee’s call for the shelving of the gazette notice leading to the ban.

Last February, a gazette notice announced an end to the use, manufacture and importation of plastic bags for household and commercial packaging in Kenya from August 28.

Those in breach risk an imprisonment of up to four years or fines of up to Sh4 million with the manufacturers lobby saying the ban would cost 60,000 jobs and force 176 manufacturers to close down their businesses.

Mr Dodhia further accused the ministry of abetting other manufacturers, whom he claimed continue to produce plastic bags.

He added that the ban seems to have been effected to prop up the businesses of friendly manufacturers, a move he terms discriminatory and malicious.

He stated that at time the Gazette Notice was published in March 2017, the company was in the process of shipping raw materials.

In law, justice Makau said, not serving amounts to not filing a defence.



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