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High Court clears sale of major State firms
A Kenya Pipeline Company depot in Nairobi.
The High Court has handed the government a major legal victory by dismissing multiple petitions challenging the Privatisation Act, 2025, and the proposed sale of stakes in 11 state-owned firms, including Kenya Pipeline Company Limited (KPC).
The court ruled that the petitioners failed to prove any constitutional violations and upheld the law in its entirety, clearing the way for the planned privatisation programme to proceed.
"In the absence of any established constitutional violation, the reliefs sought, including declarations of unconstitutionality, mandatory injunctions, and structural interdicts, cannot be granted," the court stated.
The decision marks a significant boost for the government’s privatisation agenda, where it aims to generate up to Sh600 billion from the sale of public entities to support the budget and infrastructure development.
"Constitutional remedies are not granted as a matter of course. They depend upon a demonstrated infringement of constitutional rights or principles. The petitioners have failed to discharge this burden," said the court.
The privatisation programme aims to enhance efficiency, reduce fiscal pressure, and boost private sector involvement in state-owned enterprises (SOEs). It targets the sale of 11 key parastatals to generate revenue, revive the stock market, and reduce public debt.
The Privatisation Act, 2025, repealed the 2005 law, introducing a faster process with reduced formalities while increasing Cabinet and parliamentary oversight and public participation mechanisms.
Entities targeted for privatisation include KPC, New Kenya Cooperative Creameries (KCC), Kenya Seed Company Limited (KSC), National Oil Corporation of Kenya (NOCK), Kenya Literature Bureau (KLB), and Western Kenya Rice Mills Ltd (WKRM).
Logo of the National Oil Corporation of Kenya.
Others earmarked are Numerical Machining Complex Limited (NMC), a 35 per cent stake in Vehicle Manufacturers Limited (KVM), Rivatex East Africa Limited (REAL), Mwea Rice Mills Ltd (MRM), and Kenyatta International Convention Centre (KICC).
The consolidated cases were filed by rights advocates and groups, including Inuka Kenya Ni Sisi, Eliud Karanja Matindi, Transparency International Kenya, Consumers Federation of Kenya (Cofek), and other parties against the Privatisation Commission, the Pensions Department, the National Treasury, and several state agencies.
They sought to block the implementation of the Privatisation Act, 2025, and halt the proposed sale of KPC, arguing that the process breached the Constitution and key statutes.
Among their claims were that Parliament failed to conduct meaningful public participation, that the law undermined parliamentary oversight and violated the doctrine of separation of powers.
They argued that the National Treasury Cabinet Secretary had been granted unfettered discretion to identify State entities for sale.
Some petitioners argued that privatisation threatened national security, sovereignty, and intergenerational equity, alleging it was driven by pressure from the International Monetary Fund.
Another claim was that the Act unconstitutionally allowed the conversion of public land into private ownership, warning that future generations could be denied equitable access to public resources and that public finances might face further strain.
However, the court rejected these arguments, ruling that the legislative process complied with the Constitution and met judicial standards on public participation.
It noted that Parliament received dozens of memoranda, consulted multiple stakeholders, and produced a detailed committee report addressing the issues raised.
"The Privatisation Act 2025, when measured against the exacting standards of the Constitution, fully satisfies those requirements," the court stated, removing the legal obstacle to the planned transactions.
"It is a product of a legislative process that faithfully observed the constitutional mandate of public participation and heeded the judicial guidance of this court."
High court.
The court ruled that the Act strengthens parliamentary oversight, subjects executive discretion to clear and judicially reviewable criteria, and mandates competitive and transparent procedures.
It also noted that all privatisation proceeds must be directed into the Consolidated Fund, where they remain subject to constitutional appropriation and audit.
The petitioners had alleged breaches of public finance principles under Articles 201 and 227, consumer protection rights under Article 46, and transparency obligations under Article 232.
They further sought to compel the Auditor-General to participate in valuations and due diligence before any transactions.
But the court found no inconsistency of the Act with the Constitution. It upheld the structure of the Privatisation Authority, including executive appointments, ruling that it did not violate constitutional principles.
"The Cabinet Secretary’s discretion is structured, criteria-bound, and subject to judicial review and parliamentary oversight. There is no unconstitutional delegation of legislative power," the court ruled.
It dismissed requests compelling Parliament to publish a committee report, noting that it was already in the public domain.
In addition, the court rejected demands for the Auditor-General’s involvement in pre-transaction valuations, stating that his constitutional role is to audit public funds after expenditure.
While acknowledging the "profound public interest" in state asset disposal, the court clarified that it was not endorsing privatisation as economic policy.
"The wisdom or folly of privatisation is a question for the political branches," it said, emphasising that the judiciary’s role is limited to ensuring lawful and constitutional implementation.
The court also dismissed claims that the Senate was unlawfully excluded from the law-making process, ruling that the Act was properly enacted, including as a money bill. It upheld the proposed privatisation of KPC, finding the process compliant with constitutional safeguards for public finance, consumer protection, and national security.
The respondents, led by the Treasury Cabinet Secretary, urged the court to dismiss the cases, arguing that the process adhered to the law and was designed to unlock investment, boost competitiveness, and support economic growth.
He stated that the proposed Initial Public Offering would follow capital markets rules, with valuations conducted at the implementation stage.
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