Treasury marks state assets for sale
Posted Monday, July 9 2012 at 17:38
The government is likely to realise the sale of some of its assets already sanctioned by the Cabinet within this financial year if Parliament approves the names of members of the Privatisation Commission in time.
Investment secretary Esther Koimet says the sale could be fast-tracked after the commission is in place. This will be a relief to the government, which is running a budget deficit of Sh167 billion, and intends to raise Sh107 billion from domestic market.
“It is possible to sell such assets as sugar companies, hotels and the Kenya Wine Agencies within this financial year.
“The names of members of the Privatisation Commission have been taken to Parliament for approval. It is possible to move fairly fast because the sale has already received Cabinet approval,” said Ms Koimet last week.
Finance permanent secretary Joseph Kinyua said after the Budget that the government had not factored in the sale of its assets as a way of raising funds to plug the deficit hole due uncertainty of when the process will start again.
In 2011, the government had planned to raise Sh6.6 billion from sale of its assets to fund the Budget but it failed, hence ballooning the deficit.
Privatisation Commission chief executive Solomon Kitungu had last year said he expected the sale of some of the assets to be completed by the end of 2011.
The government intends to dispose of Miwani, Nzoia, Muhoroni, Chemelil and Sony sugar companies to enable them achieve efficiency necessary to compete in the free market as required by the Common Market for East and Southern Africa (Comesa) trading bloc.
Ms Koimet said Parliament holds the key to quick disposal of sugar companies, whose restructuring of debt portfolio and change in certain policy provisions are awaited.
The Comesa sugar safeguards were to expire by March, but this was extended to March 2015 to enable sugar companies build capacity to survive once the doors are open for regional competition.
The government plans to sell 51 per cent of its stake, with farmers taking up another 30 per cent, to improve management and enable them run as viable businesses.
Plans are also afoot to divest from 11 hotels that include Intercontinental and Hilton through strategic partnerships or share issues. Others are Golf Hotel, Ark Ltd (Fairmont Hotel and Resorts), Kabarnet Hotel, Kenya Hotels Properties, Mountain Lodge (TPS Serena), Mt. Elgon Lodge and Sunset Hotel.
Others awaiting privatisation, with plans at various stages, are Consolidated Bank, Kenya Ports Authority, Kenya Pipeline Company and the giant milk processor, New Kenya Co-operative Creameries.
Privatisation of New KCC is, however, dogged by controversy, with farmers who are expected to get the first priority in buying shares disagreeing on the formula for distribution.
Sale of Kenya Meat Commission, East African Portland Cement Company, Numerical Machining Complex and Isolated Power Stations has also received Cabinet approval.