Revealed: How State agency cooked up plan to dish out rice tender

The Kenya National Trading Corporation (KNTC) is embroiled in yet another controversy in the importation of essential commodities.

This time, it is over the abrupt revocation of a tender for the duty-free importation of 250,000 metric tonnes of rice. 

Just one day after awarding the rice importation contract to 16 successful bidders, KNTC reportedly informed the suppliers through phone calls on September 10 that an alternative company would now handle the importation.

The companies whose tenders were cancelled claim the alternative firm tasked with bringing in the entire shipment was not among those that had been invited to bid for the job.

This sudden reversal comes after a separate legal challenge had already halved the import volume and shortened the importation window to just three months from six months.

What is unfolding at KNTC mirrors the edible oil saga in 2023, in which the state corporation was accused of mismanaging the importation and distribution of cooking oil, a move that was expected to lower the cost of the commodity for households.

An audit report later showed that taxpayers lost billions of shillings through corrupt deals that later claimed the jobs of senior officials at the agency. Some of them were charged in court but have since been let off the hook. 

The latest incident further raises questions of transparency at the agency.

The state-owned trading agency in August this year set out to import some 250,000 metric tonnes of rice to bridge the gap between local production and consumption.

On September 5, KNTC invited firms to bid for the job of importing the 250,000 tonnes of grade one milled rice.

The commodity was expected to bridge the thinning supply of rice in the country, which the National Treasury notes could escalate into a shortage if the government fails to supplement local production with imports.

In the tender document, KNTC said tendering would be through the restricted tender method and was “restricted to the attached provided list of bidders sourced from authorised regulators.”

The corporation invited 60 qualified importers to tender. On September 9, KNTC selected 16 companies as the successful bidders.

Each firm was allocated the quantity of rice it would import duty-free, totalling 250,000 tonnes, by October 31. 

Things would, however, take a sudden turn, and on September 10, the successful bidders were informed that their award letters had been revoked.

Sources say KNTC did not write officially to cancel the tender award, and instead, the corporation’s officials would call the importers informing them of the development.

The importation, KNTC officials told the importers, would now be undertaken by an alternative company.  

A source at one of the firms that had been picked for the tender told Financial Standard that the bidders were informed to “wait for letters revoking their tender award.”

The source also said the tender to import the entire consignment of 250,000 metric tonnes of rice has been awarded to four firms, all of which are owned by a local businessman who has interests in different sectors, mostly real estate, as well as wholesale and retail.

KNTC had not responded to queries by Financial Standard on the tender by the time of going to press.

There are further claims that six ships carrying huge consignments of rice are due to arrive from Thailand, India, and Pakistan in the coming weeks.

This is shortly after the tender award and also well ahead of the October 31 deadline, casting doubt as to whether the firms made orders this month or the rice had already been procured and was in the high seas waiting for the go-ahead to be brought into the country.

Renowned lawyer Ndegwa Njiru also decried the cancellation of the tender award, further noting that this was a reflection of the level of corruption in the Kenya Kwanza regime.

Njiru also noted that the tender was awarded to the companies affiliated with one businessman. 

The lawyer further noted that the revocation of the tender award letters came after the allocation was moved back to the Agriculture and Food Authority (AFA).

He further claimed that the businesses that have now been charged with the importation appear to be reselling the allocation and are asking “importers to pay them Sh400,000 to secure an allocation.” 

“Currently, a ship carrying over 25,000 metric tonnes of rice is being loaded in Thailand and is scheduled for shipment to Mombasa. A powerful individual is said to be behind this importation,” he said, also noting that the concerns raised by producers in court that there are adequate stocks of rice in the country were valid. 

“The irony? Kenya already has enough rice and does not require additional imports.”

KNTC also appears to say that the allocation had moved back to AFA, but fails to clarify whether it is AFA that would oversee the importation, throwing the rice importation process into further disarray.

In a letter to the Kenya Revenue Authority’s (KRA) commissioner for Customs and Border Control on Wednesday, September 17, the corporation notified the taxman that it had revoked the tender to the 16 firms that had been successful and instead noted that AFA would now undertake the quota allocation. 

“This is to notify your office that the allocation has since been revoked vide (an) AFA letter… dated September 10, 2025. As such, the allocation process will be undertaken by AFA,” said KNTC in the letter, in which it said it had attached the copies of letters of the allocation and revocation to the companies 

“This is, therefore, to notify your office of the changes for the implementation.”

KNTC did not clarify the changes despite requests for comment.

Also seemingly unsure on how to proceed are rice exporters from Pakistan, a key trading partner for Kenya, which is a major source of rice imports but also one of the largest destinations for Kenyan tea.

The Pakistani High Commission in Nairobi wrote to KNTC days after the award, revoking tenders to the 16 firms seeking clarity on the matter.

“The High Commission further seeks clarification on the specific procedures and guidelines governing the issuance and administration of this quota, to enable Pakistani exporters to engage with the Kenyan market with confidence and clarity,” said the High Commission in a September 12 letter to KNTC.

KNTC was initially expected to import 500,000 metric tonnes of rice as per a July 28, 2025 gazette notice by the National Treasury. AFA, on July 29, gave KNTC the go-ahead to import the rice. 

“Following your application to import white milled rice duty free as the anchor institution for stated efforts to stabilise prices of essential household food items and given the memorandum  CAB(25)90 of June 24, 2025 on establishment of a duty free importation framework of 500,000 metric tonnes of Grade 1 milled white rice to address the anticipated national shortfall over the next six months, you are hereby granted an allocation of 500,000 metric tonnes of Grade One while milled rice,” said AFA.

This was, however, challenged in court by rice farmers and the Farmers Party, arguing that the importation would affect local industry, and that there were adequate stocks. 

On August 11, Justice Edward Muriithi issued conservatory orders, halting the importation. 

On August 19, the judge permitted the importation of 250,000 metric tonnes, 50 per cent of the 500,000 tonnes that Treasury had planned.

The court also shortened the import window to three months from six months, giving KNTC up to October 31 to conclude the importation. 

In his ruling, Justice Muriithi acknowledged the government’s concern over a potential food shortage if it failed to supplement local production with imports.

It was after the ruling that KNTC started the restricted tender process in which it invited 60 importers to bid and later awarded 16 successful bidders. The firms received the tender award letters on September 9, but annulled them on September 10. 

The confusion seen in the ongoing importation of rice echoes the edible oil case two years ago, which resulted in an alleged loss of more than Sh6 billion of taxpayers’ money amidst claims of irregular tender award.

The firms that had been contracted were also accused of walking away with hefty amounts of money but failed to honour their end of the bargain, failing to bring in the agreed amount of cooking oil that was also alleged to be substandard.

In the edible oil importation deal, which had been rejected by local industries, noting that it undermined local production, KNTC would end up making losses after selling the imported commodity at below the market price. 

Auditor General’s reports indicate that a 20 litre jerrican was allegedly sold at Sh3,800 against a buying price of Sh4,800.

The Auditor General Nancy Gathungu also questioned KNTC’s payout of a total of Sh2.7 billion to two individuals under unclear circumstances. 

Audit reports also say that KNTC single-sourced firms supplied the oil, and even then, they only supplied a fraction of the oil that they were supposed to import.

The Kenya Bureau of Standards (Kebs) would later reject some of the edible oil imported after it was found not to be fortified with Vitamin A, a requirement for cooking oil in the country.

KNTC later contracted local manufacturers to fortify the consignment that had been rejected by Kebs.

KNTC’s former managing director Pamela Mutua and other senior officials were charged with abuse of office and failure to comply with the Public Procurement and Assets Disposal Act. The charges for some of the officials have since been dropped.

KNTC has, until recently, been among the state agencies that have largely remained idle, with its best days having been in the 1970s and 80s when the economy was largely controlled.

Then, the agency was a near monopoly in the wholesale and distribution of household items such as salt, sugar, cement and other products. Its dominance was, however, broken with liberalisation in the early 1990s. 

It had since then been on a decline to the point that in May 2004, the Cabinet had given an order that KNTC be wound up due to years of loss-making.

The Cabinet would, however, rescind the order in 2009 and instead agreed to restructure it while giving it an expanded mandate of growing the retail and wholesale sector, which was identified as one of the key pillars of the country’s Vision 2030 that had been launched a year earlier in 2008.

It was, however, not until 2022 that it got a new lease of life in 2023 when it was sanctioned by the Cabinet to play a key role in lowering the cost of living.

Then the Cabinet said the agency would be “the anchor of state initiatives to create price stabilisation for household food items.”

Shortly after that, KNTC received a waiver to import about 600,000 tonnes of food items duty-free, which included the edible oil cargo that threatened to take the trading agency down.

In importing essential food items, it was expected that KNTC could play a role in lowering the cost of living that had spiralled out of control at the time the Kenya Kwanza administration rose to power.

KNTC also got approval from the Treasury to borrow up to Sh20 billion to import the food items.