REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI " -

MILIMANI LAW COURTS

CONSTITUTIONAL AND HUMAN RIGHTS DIVISION

PETITION NO. 143 OF 2014

CONSOLIDATED WITH PETITION NO. 142 OF 2014

AND

JUDICIAL REVIEW' APPLICATION NO 140 OF 2014

MINISTRYOF ENVIRONMENT, WATER AND NATURAL RESOURCES ...2ND RESPONDENT

WATER SERVlCES REGULATORY BOARD ...............•.................•..•....•.•....... 3RD RESPONDENT

ATHIWATER SERVICES BOARD .......•........................•................•.............. 4TH RESPONDENT

THENAIROBI CITY WATER & SEWERAGE COMPANY 5TH RESPONDENT

I,LILIAN W. NDEGWA, a resident of Nairobi and of Post Office Box Number 30075-00100 Nairobi

inthe Republic of Kenya do hereby make oath and state:

1. THAT I am the County Secretary and the Head of County Public Service Board of the

1st Respondent herein, conversant with the facts herein, and duly authorised by the

1St Respondents to swear this Affidavit, thus I am competent to swear this Affidavit1

2. THAT I have read, had explained to me and understood the tenor and purport of the

Petition dated 31st March 2014 filed by the 1st Petitioner; the Petition dated 28th

March 204 filed by the 2nd and 3rd Petitioners; and the Notice of Motion Application

dated 14th day of April 2014 filed by the 4th Petitioner (Collectively referred to as

"the Petitions") and I depone to this Affidavit to oppose the Petitions on behalf of the

1st Respondent.

3. THAT I understand and the 1st Respondent's Advocates have further explained to me, which

explanation I verily believe to be sound, that the gravamen of the Petitioners' case is that:

(i). On 26th March 2014, the 1st Respondents allegedly unilaterally appointed six

"strangers" to replace "legitimate" directors of Nairobi CityWater and Sewerage

Company in alleged breach of section 2 of the First Schedule to the Water Act

2002; principles and values of good governance and public service enshrined in

both the Constitution of Kenya and Corporate Governance principles created

under the Water Act, 2002; and that the appointment was not done

competitively;

(ii). The National Government allegedly mandated to undertake "governance of

water" function delegates the function to the Water Services Regulatory Board

and the Water Services Regulatory Board allegedly "in turn delegates" the

function to Athi Water Services Board and the Nairobi City water and Sewerage

Company Ltd;

(iii). The alleged action of the 1st Respondent allegedly to unilaterally appoint six

"strangers" to replace "legitimate" directors of Nairobi CityWater and Sewerage

Company Limited eliminated "the representation of known and approved

institutional stakeholders on the Board of Directors of the Nairobi City Water and

Sewerage Company Limited" and reverses "the major governance gains so far

realized since the Water Act, 2002 came into operation in 2003;

(iv). The mandate to manage, conserve, use, control water resources; regulate rights

to use water; and to regulate and manage water supply and sewerage services

vests in the Water Services Regulatory Board by dint of the Water Act, 2002,

section 47 thereof; Article 186(2) of the Constitution of Kenya; section 22(c),

Part 1 of the Fourth Schedule to the Constitution of Kenya; and section 11, Part 2

of the Fourth Schedule to the Constitution of Kenya.

(v). Corporate Governance Principles created under the Water Act 2002 and

published as Legal Notice No. 7045 of 18th June 2010, inter alia, require that

Boards of Water Service providers be comprised of two directors from the local

authority; two members from the business and manufacturing community

nominated by their bodies; one local professional fram professional bodies

nominated from the bodies; one representative from resident organisations, one

member from a women organisation, taking into account that at least three

Board Members are women. Also, that all directorships of Water Service

providers, including directorship of Nairobi City Water and Sewerage Company

Ltd, must be advertised.

(vi). The 1st Respondent allegedly appointed George Aladwa on 3rd April 2014 to

replace the 4th Petitioner as the Chairman of the Board of Directors of the 5th

Respondent;

(vii). The action of the 1st Respondent to appoint one George Aladwa on 3rd April 2014

to replace the 4th Petitioner as the Chairman of the Board of Directors of the 5th

Respondent is absurd, arbitrary, blatantly illegal, capricious, unjust and

flagrantly breach the rules of natural justice, for alleged want of notice and

hearing of the 4th Petitioner;

(viii). The action of the 1st Respondent to appoint George Aladwa on 3rd April 2014 to

replace the 4th Petitioner as the Chairman of the Board of Directors of the 5th

3

Respondent is ultra vires the Memorandum and Articles of Association of the 5th

Respondent and breaches "the law and/or policies governing the Respondents.";

4. THAT I verily believe that the Petitions grossly misconceive the functions and mandate of

the 1st Respondent and the criteria for exercising such functions.

5. THAT I am aware that the predecessor of the 1st Respondent, City Council of Nairobi,

through its by-law, resolved to incorporate the 5th Respondent as a limited liability

company to provide water and sewerage services in Nairobi City.

6. THAT I am aware that prior to the incorporation of the 5th Respondent, the mandate to

provide water and sewerage services were undertaken by the Water and Sewerage

Department of the 1st Respondent's predecessor, the Nairobi City Council.

7. THAT the Advocates on record for the 1st Respondent advised me, which advice I verily

believe to be correct that the resolution of the 1st Respondent's predecessor, City Council of

Nairobi, to incorporate the 5th Respondent was necessitated by the Water Act (Cap 372)

Laws of Kenya which:

(i). Pursuant to the provisions of sections 46 and 47 thereof, established the Water Services

Regulatory Board as a national government agency and mandated the Board to, inter

aUa, issue licenses to Water Services Boards to provide water services through agents;

resolve disputes between consumers and licensees; set and enforce licensing

conditions; and determine standards for the provision of water services to consumers;

(ii). Pursuant to the provisions of sections Sl. S3 and S5 thereof. the Minister (now Cabinet

Secretary) would gazette Water Services Boards that would be licensed by the Water

Services Regulatory Board to provide water services. The Water Services Boards

however did not provide the water services directly to consumers, but thraugh Water

Service Providers who were agents of the Water Services Boards; and

(iii). Pursuant to the provisions of section 2(I} defined "Water Service Provider" as

being "a company, non-governmental organisation or other person or body

providing water services under and in accordance with an agreement with the

licensee within whose limits of supply the services are provided,"

Now shown to me and marked "LWN 1" is a copy of the cited provisions

8, THAT 1verily believe that with the enactment of the Water Act (Cap 372) Laws of Kenya,

particularly with the changed meaning of who could be a "Water Service Provider" within

the meaning of the Act, it became necessary that the predecessor of the 1st Respondent, City

Council of Nairobi, incorporates the 5th Respondent as a Limited Liahility Company

through which the City Council of Nairobi could continue performing its functions to

provide water and sewerage services in Nairobi City, erstwhile performed the Water and

Sewerage Department of the 1st Respondent's predecessor, the Nairobi City Council.

9. THAT the 1st Respondent's Advocates on record advised me, which advice 1 verily believe to

be correct, that vide the Water (Plan of Transfer of Water Services) Rules, 2005, the then

Minister responsible for Water published the follOWingWater Service Boards and mandated

them to appoint "agents" in specific, then Districts, in Kenya; Local Authorities were

required to provide water services in compliance with the Rules within six months of the

effective date of the Rules, to wit:

(I). Coast Water Services Board would appoint agents in Kilifi, Kwale, Lamu,

Mombasa, Taita/Taveta, Tana River and Bura Districts;

(Ii). Athi Water Services Board would appoint agents in Kajiado, Machakos, Kiambu,

Thika, Makueni and Nairobi Districts;

(Hi). Tana Water Services Board would appoint agents in Kirinyaga, Muranga, Nyeri,

Embu, Mbeere, Kitui, Meru Central, Tharaka, Meru South, Meru North, Mwingi

and Maragua Districts;

(Iv). Rift Valley Water Services Board would appoint agents in Nakuru, Narok,

Baringo, Keiyo,West Pokot, Turkana, Koibatek, and Nyandarua Districts;

(v). Northern Water Services Board would appoint agents in Garissa,ljara, Mandera,

Wajir, Isiolo, Marsabit, Moyale, Laikipia, and Samburu Districts;

(vi). Lake Victoria North Water Services Board would appoint agents in Bungoma,

Busia, Kakamega, Vihiga, Mt. Elgon, Lugari/Malava, Teso, Butere/Mumia, uasin

Gishu, Nandi North, Trans Nzoia, and Marakwet Districts; and

(vii). Lake Victoria South Water Services Board would appoint agents in Kisii Central,

Gucha, Kisumu, Nyando, Siaya, Banda, Homabay, Nyamira, Migori, Kuria, Suba,

Rachuonyo, Kerico, Buret, Transmara, Bomet and Nandi South Districts.

Now shown to me and marked "LWN 2" is a copy o/the cited Rules

10. THAT in the circumstances, I verily believe that under the former Constitutional order,

provision of water services by the predecessor of the 1st Respondent, City Council of

Nairobi, through the 5th Respondent was a licensed function by the Water Services

Regulatory Board, a national government agency, which the City Council of Nairobi could

only undertake in terms of the licensing terms set by the Water Services Regulatory Board.

11. THAT I further verily believe that under the former Constitutional order therefore,

notwithstanding that the predecessor of the 1st Respondent, City Council of Nairobi,

incorporated the 5th Respondent, under the Water Act, the 5th Respondent provided water

services as an "agent appointed by Athi Water Services Board" which is a national

government agency.

12. THAT I am aware and upon advice of the 1st Respondent' Advocates on record, I verily

believe, that the legal framework under which the 1st Respondent provides water services

in Nairobi City County has fundamentally changed under the Constitution of Kenya 2010

unlike the framework provided by the Water Act (Cap 372) that obtained under the former

Constitutional Order ..

13. THAT the 1st Respondent's Advocates advised me, which advice I verily believe to be

correct, that that section 7 of the Transitional and Consequential Provisions of the

Constitution of Kenya states that:

"(1) All laws in JOrce immediately before the effective date continues in force and shall

be construed with the alterations. adgptations. qugljfications and exceptions necessal:Y

to bring it into conformitv with this Constitution;

(2) If, with respect to any particular matter -

(a) a law that was in effect immediately before the effective date assigns responsibility

for that matter to a particular State Organ of public officer,' and

(b) a provision of this Constitution that is in effect assigns responsibility for that matter

to a different State organ or public officer, the provisions of this Constitution prevail to

the extent of the conflict"

Now shawn to me and marked ItLWN 3" is a copy of the cited provisions

14. THAT the 1st Respondent's Advocates further advised me, which advice I verily believe to

be correct, that Articles 6(1) and 6(2) of the Constitution of Kenya divide the territory of

Kenya into Counties, including the 1st Respondent, and provides that the "governments at

the national and county levels are distinct and inter-dependent and shall conduct their

mutual relations on the basis of consultation and cooperation." Now shown to me and

marked ItLWN 4" is a copy of the cited provisions

15. THAT I am aware and the 1st Respondent's Advocates further advised me, which advice I

verily believe to be correct, that the mandate to provide water and sewerage services within

the jurisdiction of the 1st Respondent is, pursuant to the provisions of sections 2(g) and

11(b) of Part 2 of the Fourth Schedule of the Constitution of Kenya, an exclusive function of

the 1st Respondentl contrary to the deleterious allegation in the PetitIons that provision of

water and sewerage services in a County is a shared function between the County

Government and the National Government. Now shawn to me and marked "LWN 5" is a copy

of the cited provisions

16. THAT I am further aware and the 1st Respondent's Advocates further advised me, which

advice I verily believe to be correct, that the mandate of the National Government in

relation to water governance is that provided for in section 22(c), Part 1 of the Constitution

of Kenya, that is "water protection, securing sufficient residual water, hydraulic engineering

and the safety of dams." Now shawn to me and marked ItLWN 6" is a copy of the cited

provisions

17. THAT I therefore verily believe that nowhere does the Constitution of Kenya, expressly or

even by implication, mandate the National Government or any agency of the National

Government, including the Water Services Regulatory Board and the Athi Water Services

Board, to provide water and sewerage services in Nairobi City County or at all, or even

regulate the provision of water and sewerage services in Nairobi City County as imputed in7

the Petitions, as provision of water and sewerage services and regulation of the services are

exclusive constitutional functions of the 1st Respondent.

18. THAT the 1st Respondent's Advocates advised me, which advice I verily believe to be

correct~ that pursuant to the provisions of Article 185(2) of the Constitution of Kenya, the

County Assembly of the 2nd Respondent is mandated to enact legislation "necessary for or

incidental to, the effective performance of the functions and exercise of the powers of the

County Government under the Fourth Schedule" including legislation to regulate the

provision of water and sewerage services by the 1st Respondent within its area of

jurisdiction. Now shown to me and marked "LWN 7" is a copy o/the cited provisions

19. THAT I therefore verily believe that how the 1st Respondent exercises its exclusive function

to provide water and sewerage services in Nairobi City County is regulated by legislation

passed by the Nairobi City County AssembLy. not by a national legislation such as

Corporate Governance Principles created under the Water Act 2002.

20. THAT I am aware that the 1st Respondent has opted to execute its Constitutional function to

provide water and sewerage services in Nairobi CityCounty through the 5th Respondent.

21. THAT the 1st Respondent's Advocates advised me, which advice I verily believe to be

correct, that the 1st Respondent is empowered to deliver its water and sewerage services

function within its area of jurisdiction either directly or through a company, such as the

5th Respondent, under the provisions of section 6(5) (a) of the County Governments Act No.

17 of 2012 which states thus:

"To ensure efficiency in the delivery of service or carrying out of a function for

which the county government ;s responsible, the county government may- (a)

establish a cowpany. firm or other body for the delivery of a particular service

or carrying on of a particular function ..."

Now shown to me and marked "LWN 8" is a copy o/the cited provisions

22. THAT I am aware that the predecessor of the 1st Respondent passed a by-law to incorporate

the 5th Respondent as a limited liability company, limited by shares and the 1st Respondent

has retained the 5th Respondent under the stated section 6(5) (a) of the County8

Governments Act No. 17 of 2012 as a County Corporation through which the 1st

Respondent can more efficiently undertake it exclusive constitutional mandate to provide

water and sanitation services within its area of jurisdiction.

23. THATthe 1st Respondent' Advocates advised me, which advice I verily believe to be correct,

that the 5th Respondent, having been incorporated by City Council of Nairobi and retained

by the 1st Respondent pursuant to legislation, the 5th Respondent is therefore a CountyCorporationwithin the meaning of section 2(1) of the Public Finance Management Act (Cap

412C) Laws of Kenya. Now shown to me and marked "LWN 9" is a copy of the cited provision.

24. THAT I therefore verily believe that unlike under the former Constitution in which the

Water Act (Cap 372) construed the 5th Respondent as an agent of Athi Water Services

Board providing water and sewerage servic.es in Nairobi City in terms of licensing

terms and regulations set by the Water Services Regulatory Board and the Minister,

under the Constitution of Kenya, 2010, the 5th Respondent is a County Corporation

through which the 1st Respondent provides water and sewerage services in Nairobi

City County in terms of legislation passed by Nairobi City County Assembly, the

Companies Act (Cap 486) Laws of Kenya, the Memorandum and Articles of

Association of the 5th Respondent, as well as the Public Finance Management Act (Cap

412C) Laws of Kenya on issues relating to fiscal management by the 5th Respondent.

25. THAT I am aware and the 1st Respondent' Advocates advised me, which advice I verily

believe to be correct, that the Public Finance Management Act (Cap 412C) Laws of Kenya

has put in place robust legal framework to ensure transparency and accountability of

county corporations, particularly in financial management by county corporations including

by the 5th Respondent, to wit:

(1). The obligation, under section 149(2) j of the Public Finance Management Act (Cap

412C) Laws of Kenya, of the Chief Executive Officer of the County Corporation to submit

annual expenditure estimates to the County Executive Committee member responsible

for the county corporation, for approval and onward transmission to the County

Executive Committee Member, Finance;

(ii). The obligation, under section 164(5) of the Public Finance Management Act (Cap 412C)

Laws of Kenya, of the Chief Executive Officer of the County Corporation to prepare and

submit annual financial statements for each financial year, to the County Executive

Committee member responsible for the county corporation, for approval and onward

transmission to the County Executive Committee Member, Finance;

(Ui), The obligation, under section 166(5) of the Public Finance Management Act (Cap 412C)

Laws of Kenya, of the Chief Executive Officer of the County Corporation to submit

quarterly reports on financial and non-financial performance of the County Corporation,

to the County Executive Committee Member responsible for the county corporation, for

approval and onward transmission to the County Treasury;

(iv), The mandate, under section 184 of the Public Finance Management Act (Cap 412C)

Laws of Kenya, of the County Executive Committee member responsible for the county

corporation and the County Executive Committee in general, to monitor financial

performance of the County Corporation and the performance of any functions or

activities that affect the financial performance of the County Corporation; and

(v). The mandate, under section 185 of the Public Finance Management Act (Cap 412C)

Laws of Kenya, of the County Treasury to annually report to the County Assembly on

both the involvement of the County government in, investment in, or funding of County

Corporations and financial and non-financial performance of each county corporation.

Now shown to me and marked "LWN10"is a copyo!the cited provisions.

26. THAT I am aware and the 1st Respondent's Advocates on record advised me, which advice

I verily believe to be correct, that the 5th Respondent, having been incorporated as a limited

company, is a separate legal entity from the 1st Respondent managed by its Board of

Directors.

27, THAT I am further aware and the 1st Respondent's Advocates on record further advised me,

which advice I verily believe to be correct, that both under the Companies Act (Cap 486)

Laws of Kenya and the Memorandum and Articles of Association of the 5th Respondent, it is

the mandate of shareholders in any company, including a public company, to elect directors.10

Annexed hereto and marked "LWN 11" is a copy of the Memorandum and Articles of

Association of the 5th Respondent.

28. THAT I am aware that on 26th March 2014, the 5th Respondent conducted an Annual

General Meeting. duly convened and chaired by the 4th Petitioner, when it was resolved that

the following persons be elected to the Board of Directors of the 5th Respondent:

(i) Timothy Muriuki

(ii) Raphael Mullei Nzomo

(iii)Moses Mooke

(iv)Abdi Koropu Tepo

(v) George Aladwa

(vi)John Mwangi Gathenya

(vii) Samuel Ojanga

(viii) Mercy Mutua

(ix) Maria Namuye

(x) Mr. Erastus Omolo

(xi) Lilian W. Ndegwa (representing Nairobi City County with Dr. Leah Oyake as the

Alternate Director)

Annexed hereto and marked "LWN 12" is a copy of the Notice of an Annual General

Meeting dated 5th March 2014 and Minutes of the Annual General Meeting held on 26th

March 2014.

29. THAT as the 1st Respondent is the sale shareholder of the 5th Respondent, and the Articles

of Association of the 5th Respondent mandate shareholders of the 5th Respondent to elect

Directors of the 5th Respondent; on 25th February 2014, the 2nd Respondent nominated

persons who would be elected at the Annual General Meeting of the 5th Respondent and

duly notified the Chief Executive Officer of the 5th Respondent.

Annexed hereto and marked "LWN 13" is a copy of the Letter notifying the Chief Executive

Officera/the 5th Respondent of the nominated persons~

30. THAT I verily believe that in nominating persons for election into the Board of Directors of

the 5th Respondent, the 1st Respondent was undertaking its mandate, not a County

Government, but as a shareholder in the 5th Respondent.

31. THAT I further verily believe that there has been no appointment of the Chairman of the

Board of Directors of the 5th Respondent to replace the outgoing Chairman, the 4th

Petitioner, whose three year tenure already expired.

32. THAT I further verily believe that the purported representation of certain institutions in the

Board of Directors of the 5th Respondent, a County Corporation, including by the KenyaNational Chamber of Commerce and Industry and ]ommo Kenyatta University as aRepresentative of the Institute of Higher Learning, both of which are National

Government Institutions, negate the independence of County Government from National

Government as envisaged in Article 6(2) of the Constitution of Kenya as earlier deponed

herein.

33. THAT I further verily believe that any Director whose tenure expires in terms of the

Memorandum and Articles of Association of the 5th Respondent should be replaced in

accordance with the Articles of Association of the 5th Respondent and the Companies Act

(Cap 486) Laws of Kenya.

34. THAT in the premises, I verily believe that the Petitions herein are grossly

incompetent, misconceived, and frivolous and ought to be dismissed with costs to

the 1st Respondent.

35. THAT what I have deponed to herein is true to the best of my knowledge and belief, save

where I have relied on information, sources whereof I have disclosed .

TE&SW':ER FOR OATHS

ox 45442 - 00100, NAIROBI

•••SWORNat NAIROBIby the said

LILIANW. NDEGWA