Turbulence: MPs cite danger in KQ nationalisation plan

Speaker Justin Muturi orders further public participation on Bill creating state-owned Kenya Airways

In Summary

• Nationalisation plan to be delayed allowing for fresh round of public participation.

• Analysts cite possible loss of taxpayers' money and lack of input on management of public aviation assets.

A KQ plane at the Moi International Airport in Mombasa
A KQ plane at the Moi International Airport in Mombasa
Image: FILE

Kenyans risk losing aviation assets worth trillions of shillings in the proposed nationalisation of Kenya Airways, emerging details show.

As a result of mounting criticism, the National Aviation Management Bill, 2020 has been delayed to allow further public participation. Critics said five days were not enough for proper input after public participation was advertised on July 2.

The Bill proposes Kenya Airways be run under an omnibus entity trading as the Kenya Aviation Corporation with a board given sweeping powers.

Critics say the board would have too much power. They said it could operate without transparency, without observing relevant regulations and without public scrutiny on everything from disposal of public assets to equitable hiring.

The proposed corporation would comprise Kenya Airways, Kenya Airports Authority and the Aviation Investment Corporation.

Some MPs confided to the Star there is potential danger in the sweeping powers that would be given to the corporation’s board in the management of aviation assets.

They said the board would have powers to hold and dispose of land, creating the possibility that the thousands of acres of Jomo Kenyatta International Airport land could be sold without public scrutiny.

The latest evaluation revealed that JKIA alone is valued at Sh1.3 trillion, assets which would be at the disposal of the board.

The board would also hold shares or interests in a company, hence, stand a chance of acquiring a shell company or special purpose vehicle to facilitate third-party private ownership of KQ, the MPs said.

The board would also have powers to acquire any company and would also receive all proceeds from the passenger service charge.

MPs expressed fears the powerful corporation would deny KAA revenue – averaging Sh13 billion per year – which would be paid to the Kenya Aviation Corporation Fund.

The corporation board would also have the power to invest any part of the fund without due approval by the Treasury.

The proposed aviation company would be exempt from the requirements of the State Corporations Act, the Public Procurement and Assets Disposal Act, the  Public Finance Management Act and the Public Service Commission Act.

This means Kenya Airways would not be subject to the State Corporations Act – no longer a public entity - and might not be subject to transparent procurement processes.

By being exempt from the PFM Act, MPs said, Kenya Airways would  no longer be subject to necessary openness and accountability in the management of its finances.

Exemptions from the provision of the Public Service Commission Act would mean KQ would not be subject to ethnic diversity in its employment.

There are fears that if the provisions are allowed, Kenyans will not have a say over use of Sh16 billion in KAA annual revenue, Sh12 billion in cash and equivalents and the Sh75 billion of KAA assets and land.

The president would appoint the chair of the board that would include the Attorney General, Cabinet Secretaries for Treasury and Transport, the corporation CEO, managing directors of Kenya Airways and the Kenya Airports Authority and four independent non-executive appointees of the Transport CS.

National Assembly Transport committee chairman David Pkosing said the exemptions are not expressly granted.

“The Bill is not giving them express exemptions but stating the process. The exemptions were in the report where the nationalisation plan was recommended. The House approved the report,” the Pokot South MP said.

The Law Society of Kenya said the purported amendments to the statutes are contrary to the law.

Speaker Justin Muturi on Thursday directed the Transport committee to conduct further public participation on the Bill.

The directive was issued after MPs raised concerns the Bill was only subjected to public participation for five days as advertised on July 2.

A heated debate ensued in the House after Ruaraka MP Tom Kajwang' and his Mandera North counterpart Abdullahi Bashir Sheikh raised concerns about lack of adequate public participation.

“We should have opened it to more participation instead of waiting for the gravy train to roll on,” Kajwang’ said.

“There are a lot of petitioners who were never given an opportunity to air their views. Others were given one day's notice,” Bashir said.

Views on the Bill were presented by Kenya Airways, KAA, the Kenya Civil Aviation Authority, Interior department, Kenya Association of Air Operators, Kenya Airline Pilots Association, R Mobisa & Associates, Walter Mocha Ongeri, Mwangi, Mwangi,  SESLaw Advocates and the Law Society of Kenya.

MPs weighed in and asked for more time for Kenyans to give thir views on the nationalisation plan.

Majority leader Amos Kimunya said those challenging the report were motivated by pecuniary interests outside the House.

Garissa Township MP Aden Duale said passing the Bill would be "preparing charge sheets for the public litigants".

“Of all legislation that went to court, the committee report and Hansard have been used to either nullify or disagree with a petitioner. This is why courts have been rejecting fundamental amendments executed by the committee of the whole,” the former Majority leader said.

“To what extent was public participation done? This is an issue that, if there is no hidden agenda, should be subjected to proper public participation,” Kiminini MP Chris Wamalwa said.

Sources told the Star  the politics of the initial plan to have a private company run JKIA to revitalise Kenya Airways has crept back.

MPs in June 2019 stopped the plan and proposed Kenya Airways be nationalised to consolidate aviation assets under one corporate body.

The LSK raised concerns about the creation of a National Aviation Council – to be chaired by the president - that would replicate the functions of Cabinet committees.

The lawyers said the establishment of Kenya Aviation Corporation is irregular and unconstitutional.

“Kenya Airways is among entities being created yet the Bill is silent on private commercial interests under KQ currently and [says] nothing on redress of issues of assets and liabilities under the succession scheme,” the LSK said.

“A stand-alone law for every state corporation called operating entities should be enacted separately in consonance with the State Corporations Act,” the lawyers advised.

SESLaw Advocates said the Bill should not be passed and should be rejected in its entirety.

Evans Lagat of the firm said the government should come up with a policy paper giving clear justification based on the financial implications, the Bill's effect on competition, employment, international laws and the aviation sector in Kenya.

“The proposed merger of KAA and KQ should not be implemented because it is not in the public interest, gives rise to a conflict with international obligations and goes against best international practices,” Lagat said.

(Edited by V. Graham)