Politics to halt sale of state-owned firms

By James Anyanzwa

The Government’s privatisation programme is set to fall even further behind schedule as politicians kick- start campaigns ahead of the March 4 General Election.

The privatisation Commission (PC), a Government body  mandated to formulate, manage and implement the privatisation programme, says some privatisation processes requiring parliamentary approvals are likely to be affected by the campaigns.

“There are some processes that require parliamentary approvals and  those activities will be affected,” Solomon Kitungu, the commission’s chief executive told The Standard last week.

Domestic borrowing

The Government’s privatisation process has stalled for close to two years due to wrangles over the composition of the board. This has left Treasury relying heavily on net external financing and domestic borrowing to offset budgetary shortfalls, which stand at Sh250.3 billion for the 2012/2013 fiscal year.

Parliament approved the list of seven appointees to the privatisation commission, which made its core task to fast track all urgent transactions.

These include nine transactions (five sugar companies, three hotels and Kenya Wine Agencies) already approved by Cabinet, on which the Minister for Finance has also made necessary presentations to the Finance, Planning and Trade Committee of Parliament as required under the Privatisation Act.

Budget deficit

In 2010, plans by the Treasury to raise Sh6 billion from privatisation programmes to help meet the Sh168.2 billion budget deficit hit a brick wall, prompting massive borrowing from the domestic market.

And now uncertainty over proceeds from the sale of state corporations has left Treasury in a fix as technocrats try to fund ballooning budgetary deficits.

The delay in the privatisation process has also seen contracts of Transaction Advisors extended to allow for advisory services during implementation stage.

Privatisation of ailing sugar millers, which was scheduled to be completed in June 2010, has stalled for two years even after receiving cabinet approved in October 2010.