Court halts sale of 11 state parastatals

By , K24 Digital
On Mon, 4 Dec, 2023 18:29 | 3 mins read
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President William Ruto's administration has suffered a major setback after the High Court issued orders halting its plans to privatise the Kenya International Conference Center(KICC) and 10 other parastatals.

Justice Chacha Mwita issued the conservatory orders barring the government from privatising the 11 institutions pending the hearing and determination of a case filed by Raila Odinga's Orange Democratic Movement(ODM) party.

"A conservatory order is hereby issued suspending implementation of section 21(1) of the Privatization Act 2023 and or any decisions made under that section, until February 6, 2024," Justice Mwita ordered.

While issuing the orders the judge noted that he was satisfied that the petition by ODM raises substantial constitutional and legal issues of public importance that require critical examination and consideration by the court.

He ordered the ODM party to serve the respondents including Attorney General Justin Muturi, Treasury CS Njuguna Ndung'u, and Speaker of the National Assembly with the pleadings immediately.

The judge also asked the respondents to file responses to the petition within 5 days after service before the hearing of the case on February 6, 2024.

In its court papers, ODM argued that some public assets like the KICC, Kenya Pipeline Company, Kenya Literature Bureau, and Kenya Seed Company can only be privatized with the consent of the people at a referendum.

This is so because they form part of the sovereign wealth of Kenya with significant cultural and strategic importance to the public.

ODM through Advocate Jackson Awele urged the court to issue the conservatory orders saying that the public was not allowed to give its views regarding the Privatization Act which made it easier to sell the state enterprises to private companies.

The party in seeking the orders questioned why the government was in a rush to sell the assets.

In addition, ODM says that the government has not demonstrated the urgency to justify the 'intended rush' or any credible reasons that outweigh the constitutional questions they have raised in their case.

“At best, the only supposed justification for the intended sales are the reported conditionalities imposed by the World Bank and the International Monetary Fund for the sale of state corporations to repay alleged foreign debt obligations,” lawyer Awele says.

ODM says that public assets such as the Kenya Literature Bureau, Kenya Seed Company and the Kenya Pipeline Company are strategic installations central to Kenya’s national security.

“Their sale accordingly elicits national security concerns that directly threaten the sovereignty of the people and the Republic of Kenya.”

Awele said once the hearing of the case commences, they will demonstrate to the court how the Act is deliberately designed to facilitate impulsive, absolute and irrational decision-making in the sale of public assets and is accordingly not in the public interest.

They will also raise the issue of public participation which they say was not adhered to and further argue how the challenged provisions do not provide for any adequate security guarantees or system of checks and balances for the integrity of the purported privatization programmes as intended by the Constitution of Kenya, 2010.

“Neither the public nor the petitioner was given a reasonable and/or meaningful opportunity to comment on or contribute to the substantive provisions of the impugned amendments at any stage before their passage by the National Assembly,” the lawyer stated.

The lawsuit comes after ODM had earlier raised concerns over President Ruto's plan to take the parastatal private, arguing that they were the state's assets financed by the public.

On October 92023, President Ruto assented to the Privatization Bill, 2023 (the impugned Act) into law and designated its commencement as October 27, 2023.

The party says that the impugned Act repealed the Privatization Act, of 2005 and thereby introduced several provisions.

The net effect according to the papers is to grant the Executive arm of government sweeping powers to dispose of prized assets comprising Kenya’s sovereign wealth.

“In passing the impugned Act, the National Assembly and the President failed in there to protect and uphold the sovereignty of the People of Kenya,” ODM said.

Towards the end of last month, the government through the Ministry of Treasury sought to privatise parastatals including the Kenya Pipeline Company, Kenya Literature Bureau (KLB), National Oil Corporation (NOC), and KICC among others.

A statement by the Treasury at the time indicated that some of the parastatals which depended on the exchequer for funding needed other sources of revenue while the profitable ones needed to be incorporated into limited companies.

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