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Government appears to go slow on JKIA take-over by Kenya Airways

By Moses Njagih | April 10th 2019

The Government appears to be holding back on the proposed takeover of Jomo Kenyatta International Airport (JKIA) by Kenya Airways (KQ).

Transport Cabinet Secretary James Macharia yesterday distanced the Government from the plan, which is contained in the Privately Initiated Investment Proposal (PIIP), a document prepared by KQ.

Mr Macharia said no one in Government was previously aware of the contents of the document. KQ had used the document to approach Kenya Airports Authority (KAA) in its takeover bid.

Macharia said Cabinet had only asked the two, KQ and KAA, to enter into negotiations that would improve the management of JKIA.

The CS was appearing before Parliament's Transport committee. The committee poured cold water on the proposal, saying it was not making financial sense how a robust agency like KAA would leave the management of JKIA to a loss-making entity like KQ.

Committee members led by Chairman David Pkosing argued that PIIP was being fronted by about 10 privately owned banks.

The banks, according to the committee, are now holding a 38 per cent stake in KQ, after converting their loans to the national carrier into equity.

“KQ remains largely a private entity. No matter what the CS says, the Government has no majority stake in it. These banks are pushing for personal interests,” said Kajiado East MP Peris Tobiko.

Mr Pkosing wondered why the Government was not considering nationalising KQ, like in the case of Ethiopian Airlines.

"There are fears that as things are now, the Government does not have a majority shareholding of KQ. We cannot therefore entrust the running of the airport with a private company,” said Pkosing.

Macharia said nationalising the airline was one option the Government was considering, but added that this could only be considered once the decision on the PIIP was concluded.

“Look at Kenya Airways beyond the economic aspect of it. Do not look at its balance sheets and its profit and loss accounts. You need to look at other tangibles that come with such a deal," said Macharia.

"I know the proposal has been opposed on grounds that KQ is a loss-making entity, but I am requesting that we look beyond the corporate level.”

He revealed that at the moment the PIIP was being considered by the Public Private Partnership Unit at Treasury.

"Public interests will be considered before any decision is made on the PIIP," said Macharia.

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