The government expects the three corporations whose operations were recently merged to outgrow dependency on the Treasury.
National Treasury Cabinet Secretary Ukur Yatani told senior officials, including Head of Public Service Joseph Kinyua, that the assets worth Sh1.2 trillion must be “sweated more to give the required financial and economic return” as most of the investments are funded through debt.
Yatani, who was granted sweeping powers to manage Kenya Railways Corporation (KRC), Kenya Pipeline Company (KPC) and Kenya Ports Authority (KPA), promised to weed out mismanagement in the respective agencies.
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“In order to reap the dividend, corporate governance in the four corporations must be improved,” he said.
In the last three financial years, the three corporations had a cumulative turnover of Sh600 billion, according to Yatani, an amount that should be sufficient to cover their operating costs and return a profit.
KRC and KPA were previously under the Ministry of Transport, Infrastructure, Public Works, Housing and Urban Development, which is headed by James Macharia, before being placed under the Industrial and Commercial Development Corporation (ICDC) and moved to the Treasury through a presidential directive.
KPC, which has had its share of mega scandals, fell under the Ministry of Petroleum before being moved to ICDC.
KRC has been largely dependent on taxpayers for survival, sucking up to Sh1 billion a month in funds directed at operations of the Sh500 billion Standard Gauge Railway project.
A decision by the main project financier, China, to suspend additional loans to complete the Naivasha-Malaba line has complicated the prospects of the new railway, which depended on the buy-in of Uganda, Rwanda and South Sudan.
Yatani anticipates that the synergies of the three corporations under the ICDC should be sufficient to more than cover the operational costs of the railway project, whose contract terms were recently declared illegal for flouting procurement laws.
“The National Treasury will support ICDC to ensure that systems are overhauled and internal controls reviewed to eradicate conflicts of interest, opportunity for fraud and mismanagement,” the CS said.