Bosses leading State firms earmarked for privatisation risk unspecified penalties for frustrating the transfer of such entities to private hands by hiding key information.
The Privatisation Commission, which targets to privatise 12 government firms by 2026, now says that it will be seeking a law change to compel State entities to provide crucial information to unlock the process.
The Commission says in the 2022-2027 strategic plan that many entities earmarked for privatisation have been “reluctant to provide the necessary information to facilitate the privatisation transactions.”
Investors seeking to buy stakes in entities usually seek information such as profitability, assets held and outstanding debts before making a final decision.
Now the Commission says it will push for a “review of the Privatisation Act, 2005 to include penalties for non-compliance” by next year and also include timelines for getting approvals from different State agencies.
The Commission plans to sensitise the entities with sanctions and also include employee incentive schemes in the privatisation proposals so as to get their backing.
The current Privatisation Act came into force in 2005 and provides the process of selling public assets and operations, including State corporations, but not much has been realised.
The Commission faces a mountain to climb, having managed to conclude a single deal involving Kenya Wine Agencies Limited in over a decade since it was established in 2008.
The last high-profile privatisation by the government was Safaricom’s initial public offering in 2008.
The Commission says it will also “lobby the Cabinet through the National Treasury to “reconsider the decision to vacate the privatisation model approved by Parliament.”
Five state-owned sugar mills which include Nzoia, Chemelil, Sony, Miwani and Muhoroni had been approved for privatisation but the process was scuttled.
The government had intended to use the Privatisation Commission to sell state-owned entities to strategic investors and reduce their reliance on taxpayers.
President William Ruto who last October said was eying the privatisation of between five and 10 parastatals within 12 months had hinted at an overhaul to the Act.
"We have a bad privatisation law and instead of the law helping us in privatisation, it has stalled the process. I have given an order that if we can’t amend it in our first 100 days in office, we will repeal it,” said Mr Ruto in mid-October.
The government had previously earmarked 26 companies for privatisation, including the Kenya Ports Authority and Kenya Pipeline alongside loss-making lenders, collapsed sugar millers and state hotels that have been run down over the years.
The Commission last year opened the search for consultants to guide the planned privatisation of the Consolidated Bank of Kenya and Development Bank of Kenya.
Both lenders have been struggling to maintain adequate capital and return profits.