The Government of Kenya plans to sell KES 2.3 billion worth KICC and 10 other firms, which include both profit making and loss making organisations.
President William Ruto on November 23, announced plans to privatize 35 state-owned companies, in a bid to jumpstart the country’s economy.
President Ruto made the announcement during the opening ceremony of the African Stock Exchanges Association’s annual meeting in Nairobi.
National Treasury Cabinet Secretary Njuguna Ndung’u on Monday, November 27, unveiled the 2023 Privatization Programme, which lists the 1st tranche of 11 state-owned corporations that are set to be privatized.
The move comes after the enactment of the Privatization Act 2023, aimed at streamlining the privatization process and reducing bureaucracy.
Kenyans have until December 11, to present their views and opinions on the privatization programme.
Privatization seeks to address challenges facing state-owned enterprises, including inadequate capital, limited expertise, outdated technology, and the dual mandate of regulatory and commercial functions.
The following entities are proposed for the Privatization Programme:
1.Kenyatta International Convention Centre (KICC)
KICC is a government-owned enterprise established under the Tourism Act 2011, to promote the business of Meetings, Incentive Travel, Conferences and Exhibitions.
Much as its financial and operational performance has been good over the years, KICC receives government support for recurrent operations.
While appearing before the National Assembly Public Investments Committee on Commercial Affairs & Energy in October, KICC’s acting Chief Executive Officer (CEO), Ms. Patricia Ondeng indicated that the corporation’s stated value in the financial year 2019/2020 of KES 2.3 billion only related to the block where the KICC tower is situated; and that the area surrounding the building is not part of the stated value since it is un-allocated Government land.
Justification and Benefits of Privatizing KICC
KICC operates in a mature and competitive sector of the market, with other private sector players offering similar services both locally and regionally.
Treasury said that the privatization of KICC will generate additional revenue for the government and reduce the demand for exchequer support.
2. Kenya Literature Bureau (KLB)
KLB is a State Corporation, wholly owned by the Government and established by the Kenya Literature Bureau Act of Parliament Cap 209 of 1980.
The principal activity of KLB is to publish, print and disseminate quality literary, educational, cultural and scientific literature and materials.
KLB recorded a turnover of KES 2.676 billion, a net profit of KES 85 million and dividends of Sh8 million in the FY 2021/2022.
Justification and Benefits for Privatizing KLB
KLB operates in a mature sector served by various private companies. Privatization of KLB will generate additional revenue to the government.
3. National Oil Corporation of Kenya (NOCK)
NOCK is a Government-owned enterprise incorporated as a limited liability company with a dual mandate of oil & gas upstream (exploration of potential oil fields) and downstream (importation, distribution & retailing of refined white oil products) operations.
NOCK was established to perform the strategic role of price stabilization and provide adequate stock of refined white oil products (oil reserves), a role NOCK has not performed due to capacity constraints.
Treasury said that NOCK relies on public funds for capital projects but has been recording Poor financial performance with huge losses, negative working capital and low liquidity
4. Kenya Pipeline Company Limited (KPC)
KPC is a limited liability company wholly owned by the government. It was established under the Companies Act in 1973 with the mandate of transporting, storing and distributing petroleum products.
KPC is a monopoly in gas and refined white oil product pipeline transportation and therefore the National Treasury noted a need for a strong regulator.
KPC is a stable good performing company and its financial and operational performance has been good making profits over the years.
Kenya Pipeline Headquarters on Nanyuki Road in Industrial Area Nairobi County
Justification and Benefits of Privatising KPC
Treasury foresees that the privatisation of KPC will encourage more private sector participation in the industry hence improving efficiency and competition.
It is also expected to attract private sector capital investments and expertise and offer a good opportunity for the expansion of the oil and gas pipeline infrastructure to unserved regions.
5. Rivatex East Africa Limited (REAL)
Rivatex East Africa is a limited liability company incorporated on 16th August 2007, wholly owned by the government through Moi University.
The Principal mandate of REAL is textile manufacturing, training, research and extension.
REAL relies on national government funding for the rehabilitation and modernization of the plant and working capital.
However, REAL’s financial and operational performance is poor and has been recording losses over the years.
6. Vehicle Manufacturers Limited (KVM)
KVM was incorporated as Leyland Kenya Limited in 1974 but changed its name in 1989 to Kenya Vehicle Manufacturers.
KVM was originally designed to produce light and heavy commercial vehicle bodies but later diversified to buses and trucks.
KVM is currently a loss-making company in an industry that is mature and sufficiently competitive. The privatization of KVM is envisaged to attract private sector capital for optimization of the company operations in body vehicle assembly and bodybuilding.
Treasury also foresees that private investors will put into use an idle production facility to create value and employment.
7. New Kenya Cooperative Creameries Limited (NKCC)
NKCC is wholly owned by the government and was established under the Companies Act in 2004.
New KCC was established to play strategic roles as an off-taker of raw milk from the dairy farmers for value addition, ensure price stabilization at both the farm gate and retail point during milk glut and ensure strategic milk reserves and strategic food reservoir.
New KCC operates in a competitive environment as the private sector actively participates in the dairy industry in both milk processing and importation of milk products.
New KCC’s financial and operational performance has not been good but is asset-rich and has property in strategic and prime areas across the country whose full potential has not been realized.
New KCC has a great potential opportunity to increase its processing capacity and product range to effectively play its strategic roles but is limited due to its debilitated and obsolete plants and technology.
8. Western Kenya Rice Mills Ltd (WKRM)
WKRM was incorporated in 1993 and is jointly owned by the National Irrigation Authority (NIA) at 60% shareholding and Western Kenya schemes Rice Farmers at 40% shareholding.
Its core business is the processing and marketing of milled white rice mainly from Western Kenya Schemes. WKRM’s financial and operation performance has been relatively poor, making losses over the years.
9. Mwea Rice Mills Ltd (MRM)
MRM is a subsidiary of the National Irrigation Authority (NIA) established as a limited liability company.
MRM is jointly owned by the NIA (55%) and Mwea rice farmers through Mwea Rice Growers Multipurpose Co-operative Society Limited (45%).
MRM was incorporated in 1967 to operate as the main rice mill at Mwea Irrigation Scheme with its major function being storage, milling and marketing of rice from the Irrigation Scheme.
Privatisation of MRM is expected to broaden the base of ownership in the economy by encouraging private ownership of entities, particularly among the farmer cooperatives.
10. Kenya Seed Company Limited (KSC)
Kenya Seed Company is a state corporation by virtue of majority shareholding by Agricultural Development Corporation (ADC) at 52.88% shareholding. ADC is a state corporation.
KSC was incorporated as a limited liability company in Kenya in 1956, with the mandate of producing and marketing high-quality certified seeds.
KSC serves the East Africa region through its subsidiaries namely: Simlaw Seeds Kenya, Kibo Seed Tanzania, Simlaw Seeds Uganda and Kenya Seed Rwanda.
KSC’s financial and operational performance has been good over the years.
11. Numerical Machining Complex Limited (NMC)
NMC is a state corporation by virtue of shareholding by Kenya Railways Corporations (KRC) at 51% and Kenya Shipyards Limited (KSL) at 49%.
KRC and KSL are state corporations wholly owned by the government.
NMC was established under the Companies Act in 1994 with the mandate of commercial production of steel parts, engineering design and production of machinery and components.
NMC’s operational and financial performance has been poor due to lack of resources for capital investments and working capital.
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