Treasury turns to 2005 law to push Sh149 billion asset sales
The Treasury now plans to use the old law to push forward the sale of State assets, targeting Sh149 billion in revenue during the 2025/26 financial year through sales including a stake in Safaricom and Kenya Pipeline Compa
The State has been dealt a major blow in its push to accelerate the sale of public firms after the High Court struck down the Privatisation Act of 2023, forcing the government to fall back on the 2005 law.
The court ruled in favour of a petition by Katiba Institute, which challenged the constitutionality of the 2023 law and accused the State of bypassing public participation.
In a report presented to Parliament, the Public Debt and Privatisation Committee confirmed that the National Treasury, guided by legal advice from the Attorney-General, would not contest the judgment and had instead resorted to implementing the older Privatisation Act.
“A review is underway to identify gaps and necessary amendments,” the committee told the House as it adopted the report last week.
The legal challenge focused on provisions in the new law that handed sweeping powers to the Treasury Cabinet Secretary.
Section 7 allowed the CS to lead all aspects of privatisation, from policy direction to oversight, effectively reducing the role of the Privatisation Commission, which was to be rebranded as the Privatisation Authority.
Katiba Institute also criticised the move to privatise six strategic State firms, including Kenya Pipeline Company, Kenyatta International Convention Centre and New Kenya Cooperative Creameries. The Institute insisted that these entities were too critical to be sold off and required more public engagement before any legislative changes were made.
Other contested elements included the creation of a Privatisation Review Board and its appointment process, which the petitioner claimed further centralised authority within the executive arm.
With the new law scrapped, the government will now rely on the older 2005 Act to raise Sh149 billion in the upcoming financial year. The Treasury expects to raise most of this amount through the sale of a stake in KPC via an IPO and a further reduction of its shareholding in Safaricom.
“There is talk that if we could offload more of our ownership of Safaricom, where we are likely to get the Sh149 billion through in the 2025/26 financial year,” Treasury CS John Mbadi said in an interview last month.
