Ruto cuts Privatisation Commission budget ahead of parastatal fire sale
Privatization Commission CEO Joseph Koskey says it will cost Kenya about Kes1.3 billion to privatize three parastatals a pointer the country may need three times as much resources to sell the 10 state companies earmarked for privatization.
The privatization boss said the costs, including transaction advisory, stakeholder engagements, legal expenses, general consultancy and PR consultancy, branding have been estimated based on the cost of privatizing Safaricom at Kes1.09 billion and Kengen at Kes423.8 million.
He, however, said the government has not allocated the commission the funds for the privatization process indicating President William Ruto may not be keen on using the commission to transact the deals.
The President has been vocally critical of the privatization commission for failing to deliver on any major deal over the last decade asking Mr Koskey to refund his salary during a visit of the Nairobi Securities Exchange in October last year.
Mr Koskey now says they presented the National Treasury with a budget of Kes1.793 billion but only got allocated a paltry Kes175 million for the financial year 2023/24.
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“We made an appeal to the Treasury on January 17, 2023, requesting for an additional budget of Kes1.661 billion to cater for the commission’s critical budget requirements, including floating three IPOs at an estimated cost of Kes1.39 billion,” Mr Koskey said.
Since 2014, former President Uhuru Kenyatta’s parastatal reforms have remained on paper with no progress towards privatization which remained toothless during his reign due to lack of a fully constituted board.
For the country to sell its stake in any company a steering committee made up of board members must approve each and every step for transparency and the absence of the Board meant the commission sat pretty even as companies identified for privatization weighed down on taxpayers as they tinkered to the brink of collapse.
Although the 11 man board was eventually constituted towards the end of the previous regime, President Ruto has indicated he wants to get rid of the commission altogether in his bid to tear down the bureaucratic checks built in to ensure transparency in the sale of the country’s assets.
President Ruto has been skeptical over the commission’s performance an in his new Privatisation Bill, 2023 recommended its removal to be replaced with a Privatisation Authority with a less powerful role of advising the Government on all Privatisation plans, implementing specific privatisation proposals, and collaborating with other organisations in Kenya and abroad.
The President also backed a push to sell parastatals without the approval of Parliament, in a law change that will give the Treasury unchecked powers in the privatisation plan with his Cabinet approving the Privatisation Bill, 2023, that gives power to the National Treasury to privatise public-owned enterprises without the approval of Parliament, describing an early process seeking the legislators’ nod as “bureaucratic.”
According to two debt risk consultants, who have been involved in several African Eurobonds, Robert Besseling, CEO, Pangea-Risk and Faisal Khan, Managing Partner, Acre Impact Capital Kenya plans to partially privatise at least ten state-owned companies by selling shares on the local bourse.
This includes Kenya Ports Authority and the Kenya Pipeline Company. The debt consultants also name Kengen, NHIF, Ketraco, Kenya Power, Kenya Railways, East African Portland, National Oil and ICDC most of whose have had their management changed by President Ruto.
