Cash-rich State firms now spared privatisation axe

Mumias Sugar Company resumed full operations in 2014. [Benjamin Sakwa/Standard]

The Privatisation Commission has struck off some State-owned entities from the list of those that had been earmarked for sale.

The commission has at the same time expressed frustration at the protracted process of privatising the five Government-owned sugar millers that are, however, still on the list.

In an updated programme of entities that the State plans to sell off to the private sector, the commission says it has recommended the removal of some of the companies and is now awaiting approval of the new list from the Cabinet.

These include the Kenya Ports Authority (KPA) that manages the Mombasa port, KenGen, as well as selected power generation plants some owned or run by the latter.

Others that are missing from the new list are New KCC and Kenya Pipeline Company.

Still on the list, however, are the five sugar millers that have proved a hard sell, the five hotels in which the Government has a stake, including the Hilton and Intercontinental, Consolidated Bank, the Development Bank of Kenya and Kenya Meat Commission.

Some components of KPA had been listed as candidates for privatisation, but the agency charged with steering the process said the transaction had been put on hold “awaiting the approval of recommendations to remove projects from the programme following enactment of the Public-Private Partnership (PPP) Act.”

The Government was also expected to further scale down its shareholding in KenGen, where it has more than 70 per cent stake, but the commission noted that following due diligence work and options analysis, a rights issue was chosen as the best option to mobilise required resources.

It said the rights issue had been completed and now it is awaiting the approval of its recommendation to remove the power producer from the privatisation programme.

The Nairobi Securities Exchange-listed power producer in 2016 sold about four billion new shares to existing shareholders in a bid to raise Sh28.8 billion in a rights issue, which was 92 per cent subscribed. It raised Sh26 billion.

The same case applies for the power stations, some of which were expected to be hived off from KenGen, with the commission recommending their removal from the programme.

Sugar task force

The commission has in the recent past expressed frustration at the process of privatising the five State-owned sugar millers.

Their sale has over the last decade experienced delays owing to a push and pull among stakeholders, the latest being a task force formed last year to look into the woes bedevilling the industry.

The task force, whose membership includes officials from the Ministry of Agriculture and governors from the sugar belt, is expected to give recommendations on the way forward, including how the sale should be undertaken.

"The commission is currently re-initiating structured engagements with all primary stakeholders in the sugar industry and has already commenced consultations with the Council of Governors with a view to co-operatively identify sustainable solutions to the bottlenecks currently facing the operations of the state-owned sugar milling companies,” said the Privatisation Commission in a statement.