To expedite the approval procedure for the sale of government assets, the Treasury has proposed measures that will bar Parliament from having a say in the sale of State-owned businesses.
The Privatization Bill will give Treasury more authority over the sale of parastatals as the new administration attempts to sell a huge chunk of government-owned businesses.
The Bill proposes that the board of the Privatization Authority, which is presently the Privatization Commission, and the Cabinet Secretary for National Treasury will both authorize the sale of State-owned businesses.
But according to the Privatization Act 2005, which is set to be repealed, a report on a privatization proposal approved by the Cabinet must be sent to the National Assembly in the form of a sessional paper.
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Before being presented for approval in the National Assembly, the report is examined by a parliamentary committee.
However, under the new proposals, Treasury Cabinet Secretary will assume responsibility for the privatization process, including choosing which firms to include in the program.
“Upon preparation of a privatization proposal, the proposal shall be approved by the Board with the concurrence of the Cabinet Secretary,” reads the draft Privatization Bill.
The last successful privatization by the government was the Safaricom IPO in 2008 but before that, late President Mwai Kibaki had privatized six companies, including KenGen, Kenya Reinsurance, Safaricom, and Mumias Sugar, through the NSE.
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During President Daniel Moi’s era, 1990-2002, Kenya privatized eight companies through public offers. They included; CMC Holdings, National Bank, and Kenya Airways
Previously, the government was looking to sell off subsidiary business interests in several hotels, banks, and firms.
They included; Kabarnet, Mt Elgon Lodge, Golf Hotel, Sunset, Kenya Safaris Lodges, and stakes in Hilton Group of Hotels, InterContinental Hotels Corporation, and Mountain Lodge Limited.
Consolidated Bank, Development Bank, Kenya Meat Commission and Kenya Cooperative Creameries, KenGen, Kenya Wines Agencies, and Portland Cement.
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The Draft Bill also supports public tendering as an alternative to an initial public offering (IPO) in the stock market for the sale of shares in state-owned companies.
“Where the selected method of privatization is public tendering… the notice of invitation to tender on the sale of shares shall be published in the government tenders’ portals or on the authority’s website and in at least two newspapers of nationwide circulation,” reads the draft Bill.
The new amendments aim to speed up privatization negotiations and increase openness surrounding the sale of public assets.
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