The Water Service Regulatory Board (Wasreb) is the national regulator of water services charged with setting of rules and enforcing standards that guide the sector towards ensuring that consumers are protected and have access to efficient, affordable and sustainable water services.
Pursuant to its legal mandate Wasreb has established Corporate Governance standards that apply to water companies licensed to operate as water service providers. The Corporate Governance Guidelines provide for the framework and tenets that direct governance and management of water companies throughout the Republic of Kenya. The aim of the standards set out in these guidelines is to entrench good governance, integrity, transparency and accountability in leadership and management of all water companies in line with article 10 of the Constitution.
Our attention has, however, been drawn to Gazette Notice No. 9976 of Vol. CXIX – No. 149 (Special Issue). Vide this Gazette Notice published on 9th October 2017; the Governor Murang’a County purportedly dissolved boards of licensed water companies within the county. By the same notice the governor appointed what he called “a care taker committee” to manage water resources, water and sanitation services and all matters incidental thereto within Murang’a County.
Setting the record straight
Wasreb wishes to advise that:
- In keeping with Articles 6 and 189 of the Constitution, the regulator has continuously advised the county government of Murang’a and its agents on efficient and sustainable ways of managing water services. Wasreb has also attended stakeholders’ meetings and offered guidance on water services provision in the county. Despite the said initiatives by Wasreb, the County did not consult on its decision to disband the board. In addition, the county has not communicated the rationale behind such unlawful decision.
- The purported dissolution of boards of water companies contravenes the corporate governance standards in the water sector and the “Caretaker committee” solely appointed by the governor is unknown in law. The decision therefore violates the legal framework for water services management.
- Directors of a licensed water company can only be dismissed by the county government by following the procedure set out in the Companies Act, 2015 through a special shareholder meeting and /or at the annual general meeting. For this to happen, directors must be in breach of their fiduciary duty and the due process must be followed by giving them a hearing on material issues in dispute.
- Dismissal of directors without the due process exposes water companies to unnecessary risks; they are left without an oversight body duly recognized in law not to mention the potential disruption of services by the so called Caretaker Committee.
- Governance lapses and resultant disruption of services by such unlawful decision has the potential of violating the water rights of consumers served by these water companies.
- Governor’s decision is also an affront on individual rights of directors of respective boards. These directors have a right to serve their full term and separate with the WSPs in an honourable manner save for as provided otherwise in law.
- The decision is likely to expose the county to unnecessary legal battles and attendant expenses, and this at the expense of consumer service.
Wasreb also draws the attention of all stakeholders in Murang’a County to the following principles;
- The water companies within Murang’a County will only deliver services optimally if they are run at arm’s length by the county through framework already provided for in the Water Act, 2016 and all the water companies should be put under a regime of regulation.
- Kenya already commercialised the water services sector for better service delivery, Murang’a County should continue with commercialisation.
- Stability in governance of companies and ring fencing of water services revenue must continue if the right to water under article 43 of the Constitution is to be achieved on a sustainable basis and confidence among financiers is to be strengthened and maintained. The repayment of any loans taken whether local or from our bilateral or multilateral partners is an integral part of this confidence building.
- The momentum realised by reforms which unlocked revenues to fund rehabilitation and capital works of the water sector should be sustained by the county, adhering to international good practice as far as water management is concerned.
Wasreb therefore maintains that the decision carried in Gazette Notice No. 9976 of Vol. CXIX – No. 149 (Special Issue) as published by Murang’a County is invalid in law for reasons set out above.
Eng. Robert Gakubia,
Chief Executive Officer
Date: 26th July 2017