An application by the government to suspend a judgment blocking plans to privatise eleven parastatals, among them the Kenyatta International Convention Centre (KICC) and Kenya Pipeline Company, has been rejected by the appellate court.
Dismissing the application, the court said the government had failed to show how the appeal would be rendered useless if the application was not granted.
The government had claimed that some of the loss-making institutions were subjecting immense pressure on limited public resources, forcing the government to finance and maintain public assets that offer no tangible public benefit.
Justices Fred Ochieng, Weldon Korir and Joel Ngugi said no evidence was placed before the court to demonstrate the compelling public interest, which would warrant a suspension of the declaration of unconstitutionality of the privatisation Act, 2023.
"The Court cannot make a finding that an appeal would be rendered nugatory based solely on conjecture or speculative reasoning," the judges ruled.
The judges added that public interest considerations run in the opposite direction since, in the intervening period, should the judgment be suspended, the government may proceed to sell parastatals that are either “natural” or inherent monopolies or are of strategic importance or national interest.
“Should this happen, both the transfer of functions and costs are likely to be irreversible. Therefore, it is our view that public interest lies in awaiting the determination of the appeal,” added the judges.
The Act was declared unconstitutional last September by High Court judge Chacha Mwita, who faulted the National Assembly for not conducting meaningful, adequate or effective public participation before passing the Act.
The judge had stated that the decision to privatise the iconic KICC, a national monument, contravened Article 11(2) of the Constitution as read with the provisions of the Monuments and Heritage Act and was, therefore, unconstitutional, unlawful, null and void.
The government had argued that invalidating the Privatisation Act would put immense pressure on limited public resources, forcing the government to finance and maintain public assets that offer no tangible public benefit.
The court heard that the main and urgent benefit of the Privatisation Act, was to provide for a mechanism in which publicly-owned enterprises are to be managed and commercialised in an economically sound way for the benefit of the public. This would be lost, said the government.
Parliament on its part submitted that the court erred by stating that the public participation conducted during the enactment of the Privatisation Act, 2023, was insufficient.
According to Parliament, the judge misinterpreted the doctrine of public participation, ignored existing mechanisms available to the National Assembly, and undermined the Assembly’s discretion in choosing the appropriate method of public participation.
Further, Parliament said the court incorrectly applied a new standard by requiring Bills and Notices to be published in Kiswahili, a requirement not established by the Supreme Court.
National Assembly also argued that the judgment had far-reaching implications, as it imposes new burdens on the National Assembly to publish legislation in Kiswahili.
In opposition, Orange Democratic Movement (ODM), Katiba Institute and others argued that suspending the decision would violate constitutional principles, as it would allow the privatisation of strategic public assets without adequate public participation.
Further, granting conservatory orders would harm public interest by facilitating unconstitutional actions and potentially irreversible changes, such as transferring government assets to private entities.
Raila Odinga’s ODM successfully challenged the privatisation of the 11 institutions, arguing that they were strategic importance and privatising them was threat to Kenya's sovereignty.
Other than KICC, other State corporations lined up for privatisation were New Kenya Cooperative Creameries (KCC), National Oil Corporation of Kenya (NOCK), Mwea Rice Mills Ltd (MRM), Western Kenya Rice Mills Ltd (WKRM), Numerical Machining Complex Limited (NMC), Kenya Vehicle Manufacturers Limited (KVM) and Moi University owned Rivatex East Africa Limited (REAL).
Kenya Literature Bureau (KLB), Kenya Pipeline Company (KPC) and Kenya Seed Company had also been earmarked for sale.
The court said section 22(5) of the Privatisation Act, which provides that if the National Assembly does not ratify a decision on privatisation within 90 days, then the decision will be deemed ratified, was unconstitutional.
