Direct sales of government assets under the privatisation programme will now be opened to public tendering in a move meant to enhance transparency and openness in the disposals that have been abused in the past by individuals to acquire key assets at understated prices.
The Draft Privatisation Bill 2023 underpins public tendering as an option for the sale of shares in State entities that is not being done through an initial public offering (IPO) at the stock market.
Under previous provisions in the Privatisation Act 2005—which is set to be repealed—, private sale of assets was allowed, including through liquidation, but without a requirement that the transaction is opened to the public for competitive bidding.
“Where the selected method of privatisation is public tendering… the notice of invitation to tender on the sale of shares shall be published in the government tenders’ portals or on the authority’s website and in at least two newspapers of nationwide circulation,” reads the draft Bill.
The new Bill is, therefore, proposing that the Privatisation Authority sets up a tender evaluation committee which will lead the sale process, and will include representatives from the National Treasury, the authority, the line ministry responsible and any other relevant institution as may be determined by the authority.
The changes in the new Bill are meant to improve the transparency around the sale of public assets, and also hasten privatisation deals at a time when the government is looking to let go of some of its enterprises that are costing taxpayers billions of shillings every year to support.
In the past, major privatisation deals have largely been in form of IPOs, including the sale of government stakes in KenGen, Mumias Sugar, Safaricom and Kenya Re.
Meanwhile, the disposal of Telkom Kenya and Kenya Railways Corporation in 2007 and 2006 took the form of a strategic sale and concessioning respectively. Both have since then reverted to full government ownership.
Besides public tendering and IPOs, the privatisation of State firms can be done through sales resulting from the exercise of pre-emptive rights.
In this method, the sale is to be undertaken in accordance with the procedure specified in the respective entity’s charter documents.
Where no such documents exist, the sale is to be guided by provisions of the Companies Act 2015.