The government’s plan to privatise some of the loss-making state corporations has run into hitches after the Senate Trade and Tourism committee rejected it yesterday.
The committee said privatisation is not a viable route and only serves to benefit a few business people and government officials at the expense of Kenyans.
The committee said counties will lose billions of shillings if the corporations are sold, as most of the devolved units have stakes in the firms.
The committee questioned National Treasury’s Public Investments director Stanley Kamau over the plan to privatise five state-owned hotels and five sugar companies.
Kamau said the government had initiated plans to privatise Chemelil, Nzoia Sugar, South Nyanza, Miwani and Muhoroni sugar companies.
The government also wants to privatise Golf Limited, Sunset Limited, Mt Elgon Limited, Kabarnet Limited and Kenya Safari Lodges and Hotels on the grounds that they have become a burden to taxpayers.
“We initiated the plans in 2014 but the same was halted by the Privatisation Commission to allow for a task force that was appointed by State House to look into the viability of this plan,” Kamau said.
Kamau added that the ban was lifted in 2015 after the report was produced, but the commission immediately contracted a consultant to again determine the suitability and viability of the move.
The director told senators that Chemelil, Nzoia and South Nyanza Sugar companies had made a net loss of Sh42 billion as at June 30, 2018.
Chemelil had a total asset of Sh4.5 billion against total liabilities of Sh7.1 billion. Nzoia Sugar had Sh12 billion in assets against liability of Sh51 billion, while South Nyanza Sugar Company had a Sh3.8 billion worth of assets against Sh4.9 billion liabilities.
But the committee rubbished the government plan and blamed it for failing to reign in the management that has run down the institutions. The committee is chaired by Kirinyanga Senator Charles Kibiru.
“These losses are often engineered by the management so that they can buy them. Privatisation in Kenya is not done in good faith, that we know,” Kibiru said.
The chairman wondered what would motivate a person to buy a company that has made losses running into billions of shillings over the years.
“Tell me the motivation, if it is not corruption. We have privatised Sirikwa Hotel in Eldoret. Today, it is one of the worst hotels there. The same has happened to Uchumi Supermarket and Mumia Sugar Company. They are on their deathbeds,” he said.
Bomet Senator Christopher Langat said the Privatization Act, 2015 that the government is using does not take into account the counties, yet some of them have shares in the corporations.
“This law must be amended first to take care of the interest of the counties. We also need to have a comparative analysis report so that we know where this kind of plan has worked in the world,” he said.
According to the submission by Kamau, the counties have shares in most of the hotels owned by the state.
Golf Hotel with a 20-bed capacity is 80 per cent co-owned by the national government and 20 per cent by Kakamega county. Sunset Hotel in Kisumu is co-owned by Tourism Finance Corporation (95.4 per cent) and Kisumu county (4.6 per cent).
