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Privatisation: Kenya Pipeline opposes plan to sell parastatals

By Moses Nyamori | November 7th 2018


Kenya Pipeline Company Chairman John Ngumi when he appeared before the Senate Eneregy Committee at Parliament yesterday. [Boniface Okendo, Standard]

Top officials of the Kenya Pipeline Company have opposed plans by the Government to sell at least 26 State firms.

The board chairman, John Ngumi, described the decision to sell the firms to plug the budget deficit as “irrational and illogical”.

Appearing before the Senate Energy Committee chaired yesterday, Mr Ngumi said the Government should ensure proper running of the firms instead of selling them.

“There are many corporations that have been privatised in the past but they are worse in terms of service delivery. What is important is to make sure that the corporations are properly managed,” he told the senators.

Nakuru Senator Susan Kihika has declared that she will oppose the plan, claiming there could be a plot to sell the firms at a throwaway prices to earmarked individuals.

“We suspect these corporations will be underpriced so that they are offloaded cheaply to make money for some people. We shall resist as the Senate,” she said.

Kenya Pipeline, East African Portland Cement, National Bank of Kenya, Consolidated Bank of Kenya, Kenya Meat Commission, Development Bank of Kenya, and five sugar millers — Chemelil, Sony, Nzoia, Miwani and Muhoroni - are among the 26 firms the State has put up for sale.

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The Privatisation Commission (PC) gave mobilisation of resources for additional investments, enhancing transparency and corporate governance, broadening shareholding, developing the capital markets, and raising resources to support the Government’s budget as some of the reasons to sell the firms.

Ngumi said the firms earmarked for sale had the capacity to make good returns to the exchequer.

This, he said, could only be achieved if the Government restructured the firms to make them more productive.

He said most of the firms were facing governance challenges, which he said should be addressed for them to make money.

“They have the capacity to make money but there are challenges of governance that must be addressed,” he said.

He told the committee that the Kenya Pipeline Company was in a position to hand the exchequer returns equivalent to what Safaricom makes in a year.

Ngumi blamed the mismanagement of State firms on lack of power by their boards in procurement as well as hiring of the chief officer.

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