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)

-BETWEENOKIY A OMT AT AH OKOITI.

1ST PETITIONER

BALKRISHMA RAMJI DEVAN ........................................................................................

2ND PETITIONER

PELICAN SIGNS LIMITED ..............................................................................................

3 RD PETITION ER

PETER KUGU RU..............................................................................................................

4TH PETITIONER

-VERSUSNAIROBI ..C1TY COU NTY

"MINISTRY

o<

1ST RESPONDENT

0<

2ND RESPONDENT

OF ENVIRONMENT, WATER AND NATURAL RESOURCES

.

WATER SERVICES REGULATORY BOARD. ,.

RD

RESPONDENT

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

STH RESPONDENT

THE NAIROBI CITY WATER SEWERAGE COMPANY L1MITED

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

REPLYING AFFIDAVIT

FOR AND ON BEHALF OF THE 4TH RESPONDENT

(ATHI WATER SERVICES BOARD)

I, CLEMENT MUGAMBI, a resident
00100, Nairobi,
1.

of Nairobi County and of Post Office Box Number 45283-

in the Republic of Kenya

do hereby make oath and state as follows:-

THAT I am the Legal Manager of the 4th Respondent

Board, well
and

hence

conversant

with

competent

to

the facts
swear

herein,

of the Petition

this

Affidavit

for

herein,
and

Athi Water

Services

duly authorised
on

behalf

of

to
the

4th Respondent.
2.

THAT I have read and had explained

understood

the contents

to me, by our Advocates

of the Petitioner's

Petition

on record and I have

No. 143 of 2014 brought

under

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

the Certificate

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

force and shall be construed with such alterations,

date continues to be in

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.

alterations,

8 of 2002).

adaptations,

This Act however has to be construed with

qualifications

such

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

of WASREB, the 4th Respondent contracted

Ad,

2002 and with the approval

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
Service Provision

Agreement

in a

(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. Because Water 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

management and the

no equivalent,

its pricing,

customer

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
the 5th Respondent warrants that it will

not alter,

1.1 (h) in which

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

d. Paragraph 3 of the Special Conditions to the SPA adds Article

the 5th Respondent warrants that it shall invite

1. 1(i) in which

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

and competitive

iii.

of the directors through a transparent

process; and

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

otherwise be provided by
..

entity

public entity,
"

to provide

functions

that

would

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

regard thereto shall be respected and implemented,

and/or guidelines with

provided always that the

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

10.

THAT in granting its approval to the SPA between the 4th and 5th Respondents, the
3rd Respondent issued some Conditions of Approval (which form part of SPA by
incorporation)

of which the following

these Petitions:-

are the pertinent

paragraphs relevant to

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 SPA for 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,

and marked 'CM-2'),

2013 (annexed hereto

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, provision
towns

without

formal

urban

provision

including
Water

service

water

and

water,

Service

water

sanitation
sanitation
Water

Authority.

rural

water

and sanitation

services in small and medium

providers,

Boards,

Water Resources Management

12.

including

of water and sanitation

counties),

excluding

services

harvesting

services

with

and

sewerage

(specific

formal

to

service

companies,

Services Regulatory

Board and

"

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
sanitation
sewerage

services

with formal

companies',

service

provision

including

water,

water

sanitation

and
and

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

Secretary

in the Ministry

of the above lacunae, the Cabinet

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

transitional

this committee

was to 'propose

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

Services Boards under the SPA the transitional

the function

of water and sanitation

of the Water

mechanisms for transferring

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

provide for best industry

Governance

Guidelines

practices for utility

issued by WASREB

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
process in the appointment
Respondent,

that

is

and consultative
such as the 5th

of Directors of water utilities

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

county law regulating the governance of water utilities

or

in Kenya at the

moment, the SPA remains 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,

Respondents are bound by Article 10 of the Constitution,
the promotion of public participation,

the 1st and 5th

and in particular,

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

hereto and marked

matter
17.

the law,

practices

(annexed
on this

dated 9th April 2004).

did not participate

at which the subject

to the proceedings

of that

Directors
meeting

the process that was followed

18.

and best utility

'CM-4 is copy of our advisory to the County Government

THAT the 4th Respondent

Meeting

good governance

THAT what
information

is stated

hereinabove

herein were appointed

and/or

in arriving

in the Company's

the appointments

DRAWN & FIL D BY:NYACHAE & ASHITIVA ADVOCATES

KOINANGE STREET
MERCANTILE HOUSE, 1ST FLOOR
P.O. BOX 62297-00200
NAIROBI.
E-mail: info@nyachaeashitiva.com;

'\V\f\'I

is true

and to the

2014

Tel: 2213200; Cell: 0721681515

TO BE SERVED UPON:ISHMAEL & COMPANY

ADVOCATES
ROOM P.78, 3RD FLOOR, TABBY HOUSE
COMMERCIAL STREET
P.O. BOX 446-01000
THIKA
PROFESSORTOM OJIENDA & ASSOCIATES
ADVOCATES
SILVERPOOL OFFICE SUITE NO. A8
JABAVU LANE
P.O. BOX 13699-00100
NAIROBI

General

and is neither
made thereat,

privy
nor

at the appointments.

and belief.

~
SWORN at NAIROBI thisL
day of
by the said aforesaid CLEMENT MUG
before me: i.{.

Annual

best

of my knowledge,

GIKERA & VADGAMA

ADVOCATES
BEMUDA PLAZA, BLOCK B, SUITE A3
NGONG ROAD
P.O. BOX 720-00621
NAIROBI
MBUGWA ATUDO & MACHARIA
ADVOCATES
JADALA PLACE, 2ND FLOOR
NGONG LANE, OFF NGONG ROAD
P.O. BOX 10409-00100
NAIROBI