Privatisation Bill proposes formation of authority to oversee transactions
The National Treasury is proposing for the formation of a Privatisation Authority to replace the existing Privatisation Commission to among others advise the government on all aspects of privatisation of public entities.
Under the Draft Privatisation Bill 2023 which also seeks to repeal the Privatization Act 2005 which had establish the Privatisation Commission, the authority will also have a nine member board including a Managing Director, whose chairman will be a presidential appointee for a three year term renewable once.
The Bill also gives National Treasury Cabinet Secretary the powers to countersign privatisation agreement which the Principal Secretary currently has.
“An agreement to give effect to a privatisation shall not bind a public entity unless it is signed or countersigned by the Cabinet Secretary,” states section 31 of the Bill.
However, the privatisation shall not apply to an agreement to sell an asset as part of liquidation if the sale price of the asset is less than Ksh 10,000,000 or such other amount as the Cabinet Secretary may prescribe.
The draft bill published by National Treasury Prof Njuguna Ndung’u for public consultation is aimed at creating a robust private sector responsible for production and delivery of products and services away from public sector.
Treasury also expects the bill to help improve the infrastructure and the delivery of public services through the involvement of private capital and expertise, reduce the demand for exchequer resources, generate additional revenue for the government through compensation for privatizations and, improve the regulation of the economy by reducing conflicts between the public sector’s regulatory functions and commercial functions.
The bill also seeks to broaden the base of ownership in the Kenyan economy by encouraging private ownership of entities, improve the efficiency of the Kenyan economy by making it more responsive to market forces and enhance and develop the capital markets in Kenya.
Nonetheless, the privatisation process will exclude sale of shares in the secondary market, sale of shares by an entity that conducts investment and divestiture as part of its mandate, sale of new shares to existing shareholders through a rights issue and any balance sheet reorganisation which may lead to dilution of the percentage of shares held by a public entity.