MPs stop plan to bypass house in selling State firms
The main gate at Nzoia Sugar Company in Kanduyi constituency Bungoma County.
A parliamentary committee has removed a section of a Bill that grants the National Treasury cabinet secretary unchecked powers to sell parastatals without the approval of the National Assembly.
The Finance and National Planning Committee has proposed further changes to the Privatisation Bill 2023 that will compel the Treasury to seek the approval of Parliament before selling any State entity.
The cabinet in March approved the Privatisation Bill, 2023 that gives Treasury powers to push through a privatisation plan without the approval of the House.
“We have stamped the authority of Parliament. We have proposed further amendments to the Bill that will ensure that the privatisation programme must be approved by Parliament,” Mr Kuria Kimani, who chairs the committee, said.
“The planned privatisation of key State parastatals like the Kenya Electricity Generating Company (KenGen) and the Kenya Ports Authority (KPA) is not a simple matter for Parliament to be by-passed.”
“The role of the National Assembly in the sale of parastatals cannot be taken away from the people’s representatives,” said Mr Kimani during hearings to collect the views of the public on the proposed law.
“This Bill takes the powers of the Privatisation Commission and vests it on the cabinet secretary. This could open doors for the cabinet secretary to sell parastatals to persons who are already predetermined.”
The cabinet approved the Bill that seeks to fast-track the process of the sale of non-strategic, non-performing public entities to help improve the upgrade of infrastructure and the delivery of services to Kenyans.
The Cabinet argued the sale of parastatals would also tame the demand for government resources and generate more funds to drive the development agenda. The Bill seeks to repeal the Privatisation Act 2005, which requires the Treasury cabinet secretary to present a report on the privatisation proposals approved by the cabinet to the relevant committee of Parliament.
The Constitution gives both houses of Parliament—the National Assembly and Senate— substantial powers to check the decisions of the Executive. The Privatisation Bill, 2023 pro vides a revised regulatory framework for the privatisation of public entities to improve the efficiency and competitiveness.
It seeks to repeal the Privatisation Act (No 2 of 2015). In the additional changes proposed by the committee to the Bill, Mr Kimani said the there is a proposal to increase the qualification of board members from the current threshold.
The managing director of the Privatisation Authority will be required to hold a degree in either economics, accounting, finance or any other relevant degree from a recognised university. The candidate will, in addition, be required to have 10 years of work experience of which five years shall be in a senior management level in a relevant field.
The committee has also recommended an increase of the number of board members not being public servants from the current four to five to make the total number of the Privatisation Authority board nine from eight proposed in the Bill. “We have also recommended that the appointment of the Privatisation Commission board members be approved by Parliament.
Those who will manage the privatisation exercise must be approved by the House,” Mr Kimani said. “The committee, having considered the Bill and the submissions from members of the public and stakeholders, recommends that the House approves the Bill with amendments.”
The Privatisation Commission has lined up 25 entities for State divestiture, including the Kenya Pipeline Company, the Kenya Ports Authority, the Kenya Tourist Development Corporation, the Consolidated Bank, the Development Bank of Kenya and the Agrochemical and Food Corporation.
The list also has ailing State sugar millers — Chemilil, South Nyanza, Nzoia, Miwani and Muhoroni. The programme also proposes further share divestitures by the government in listed firms, including KenGen, East Africa Portland Cement and the National Bank of Kenya.
The country went through a serious phase of privatisation in the 1990s and 2000s through the World Bank-led structural adjustment programmes that saw the government significantly divest from companies such as Kenya Airways, Uchumi Supermarkets, General Motors, Firestone and Mumias Sugar.
