Taxpayers ended up carrying an extra Sh362 million to support the National Environment Management Authority after the government removed environmental audit charges that had previously been paid by developers.
In a report published on Wednesday, November 21, 2018 at 21:47, the Auditor-General said Treasury funding for Nema rose to Sh615 million in the year to June 2017, up from Sh253 million in 2016.
The increase came after the Cabinet, in November 2016, abolished environmental impact assessment fees in a bid to reduce project costs and improve Kenya’s competitiveness. The audit said Nema’s income from assessing construction projects fell by Sh268 million to Sh404 million, a drop of 39 percent from the previous year.
Before the change, contractors paid Nema between Sh10,000 and Sh40 million for environmental audits, depending on the risk level of the project. The fees had been a major source of revenue for the regulator.
The Cabinet also removed charges imposed by the National Construction Authority on projects worth more than Sh5 million. Those projects had attracted a levy of 0.5 per cent of the contract value.
Parliament later criticised the policy shift, saying it would leave taxpayers exposed to a heavier burden while easing pressure on wealthy investors. In one report, MPs said: “The scrapping of the environmental impact assessment fees which used to be paid to Nema amounts to Wanjiku [taxpayers] subsidising the private sector,”
Private investors, through the Kenya Private Sector Alliance, had pushed President Uhuru Kenyatta to remove the charges. Separately, the Mining ministry began collecting a two per cent royalty on construction materials in 2014, a move that increased the cost of quarry stones, concrete blocks, hardcore, ballast and sand.
