Cabinet Secretary for National Treasury and Economic Planning John Mbadi before the National Assembly Public Debt and Privatisation Committee at Continental House Nairobi on November 28, 2024.
The government will revert to the old 2005 Privatisation Act after losing a court battle to enact a new law that would have placed the National Treasury Cabinet Secretary at the heart of selling State firms.
The Public Debt and Privatisation Committee has revealed that the government, with the advice of the Attorney General’s office, chose not to appeal a ruling of the High Court that deemed the new Privatisation Act, 2023 as unconstitutional.
“Following the Attorney General’s advice, the National Treasury opted not to appeal the High Court’s decision and instead reverted to the 2005 Privatisation Act,” the committee said in a report adopted in Parliament last week.
“A review is underway to identify gaps and necessary amendments.”
The High Court ruled the Privatisation Act of 2023 as unconstitutional following a legal challenge by Katiba Institute which faulted new provisions that gave unfettered access to the National Treasury Cabinet Secretary to drive the privatisation process.
Section 7 of the new act gave the Cabinet Secretary (CS) more power to call the shots in privatisation including providing policy direction, developing and formulating the privatisation programme, and overseeing the administration of this Act.
The National Treasury Building in Nairobi.
The powers to the Treasury CS would limit the role of the Privatisation Commission which was to be renamed the Privatisation Authority.
Other contested clauses related to the powers of the Treasury Cabinet Secretary include the creation of a Privatisation Review Board and the designation of members.
The legal challenge by Katiba Institute also opposed the privatisation of six State Corporations- the Kenyatta International Convention Centre (KICC), Kenya Pipeline Company (KPC), and the New Kenya Cooperative Creameries (NKCC).
Kenyatta International Convention Centre, in Nairobi.
The petitioner argued that the entities were either monopolies or were of strategic importance.
The petition also claimed there was insufficient public participation in the legislative process.
The National Treasury will be latching on to the old law and the Privatisation Commission to revive the privatisation plan, which has been projected to mobilise Sh149 billion in revenue streams for the government in the 2025/26 financial year.
The bulk of the revenues is pegged on the sale of part of KPC via an initial public offer (IPO) and the government’s further divestiture in Safaricom, where it holds a 35 percent stake.
Treasury Cabinet Secretary John Mbad reckoned Safaricom was the only big-ticket firm that could help the government to its multi-billion shillings haul from privatisation.
Oil storage tanks at the Kenya Pipeline Company in Nairobi.
“There is talk that if we could offload more of our ownership of Safaricom, where we are likely to get the Sh149 billion through privatisation in the 2025/26 financial year,” CS Mbadi told the Business Daily in an interview last month.
“We are moving quickly and have signed some documents to allow for the privatisation of KPC to be done. We say KPC is ready because, first, it is profit-making, and second, it is already a limited liability company.
The privatisation of KPC could be challenged again in court based on its strategic importance to the country.
