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April 19 - 25, 2013


 Coastweek   Kenya

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Government cancels any future
privatisation of Mombasa Port

"For the port of Mombasa to be privatized, it
would require Cabinet approval, which did not
take place after the plans were shelved, and as
things stand now, it remains just a suggestion"


NAIROBI (Xinhua) -- Kenya will not privatize the port of Mombasa after all, the body in charge of privatization in the country has stated.

The authority also promised to improve the speed at which approved privatization assets will be sold to the public.

The CEO of Privatization Commission Solomon Kitungu said in Nairobi that even though plans to privatize the port of Mombasa were completed in 1994, the process to divestiture the port was shelved at the suggestion stage after the idea met political resistance.

"Political goodwill is a good ingredient during any privatization.

"For the port of Mombasa to be privatized, it would require Cabinet approval, which did not take place after the plans were shelved, and as things stand now, it remains just a suggestion," Kitungu said during a media workshop.

He said the privatization of the 26 approved state assets will proceed faster because it has been slowed by the making of Constitution, developing of the privatization legislation and the seeking of clarifications on operational issues under the new privatization law and the just concluded elections.

"The fact that this is the first time this privatization law is being applied also slowed down the process.

"This time round, the process will be faster as the law is much more understandable," Kitungu told Xinhua late on Thursday.

The CEO said trade unionists and politicians politicized the privatization of Mombasa Port project at the idea stage without even delving into the benefits the divestiture would bring forth.

The privatization project supported development of a performance contract to bring in a new private management at the port which would have resulted in a notable increase in the port’s performance.

He said 26 state-run bodies are in various stages of privatization with the Kenya Wines Agency Limited (KWAL) being the only one that has been fully approved for divestiture.

He said the Commission cannot discriminate selling of state assets to foreigners since the law is very clear that all persons are eligible to buy state assets unless restricted by other laws recognized by the Constitution.

"Though the Capital Markets Authority (CMA) laws limit foreign ownership in certain companies, it is upon our discretion to make recommendations to the Cabinet indicating how privatization of a certain state asset will benefit the local citizens.

"The issue of referring to some assets as ‘strategic’ and therefore limiting private sector participation in them does not arise."

Kenya’s Parliament in 2010 adopted a report that proposed the privatization of state-owned companies and parastatal bodies.

The report gave the go-ahead to the Commission to privatize five public sugar companies, three hotels, two banks and two companies in the energy sector among others.

In 1994, Kenya started to implement a parastatal reform project, financed by the World Bank whose objective was to support parastatal reform as a means to reduce government’s role in the economy.

The project included the privatization of at least 20 public enterprises out of the over 200 earmarked for divestiture and the liquidation of the uneconomic ones.

During the first phase of the privatization program, the government privatized a large number of small and medium enterprises, but progress in privatizing key utilities and transportation enterprises has been slow.

Kitungu said the Commission looks at the requirement of a specific state company that will enable it to have comparative advantage when privatized and evaluate if that need is available locally.

Founded in 1977 after the dissolution of the East African Airways, Kenya’s national carrier was privatized in 1996, with the government of Kenya retaining the largest shareholding at 29.8 per cent followed by KLM at 26.7 per cent with the rest of the shares being held by private owners.


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