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State bid to own KQ takes off as bill set for debate in House

Sunday June 28 2020
Bd-KQ

Kenya Airways planes at Jomo Kenyatta International Airport. Photo/FILE

By SAMWEL OWINO

A bill seeking to provide a legal framework for nationalising Kenya Airways will be tabled in the National Assembly on Tuesday next week, setting the stage for the process of turning around the dwindling fortunes of the national carrier.

The bill aims to give effect to the recommendations of the parliamentary report on the inquiry into the Kenya Airways Privately Initiated Investment Proposal to the Kenya Airports Authority (KAA).

The 2020 National Aviation Management Bill by the Transport, Public Works and Housing Committee will be tabled for the first reading on Tuesday in what could change the stakes for key stakeholders, including a consortium of local banks and Royal Dutch Airlines.

FIRST READING

Committee chairman David Pkosing (Pokot South) confirmed that the bill has undergone the first reading in the House and the panel will now invite the public to comment on it as required by law before bringing it back for the second reading, when lawmakers will debate on it.

Article 118 of the Constitution provides that Parliament facilitate public participation and involvement in its legislative and other business.

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The bill, which has been exclusively obtained by the Sunday Nation, seeks to guide the implementation of its earlier report that recommended the State take over the national carrier.

Under the plan, the government, which owns 48.9 per cent of KQ, is expected to buy out the remaining holders of 51.1 per cent of the shares and form an aviation holding company to run the airline and KAA, which manages airports.

REGAINING LOST GLORY

Mr Pkosing said the committee has recommended setting aside Sh800 million to buy out minority investors.

“The focus of the committee now is to deliver the President’s intention to restructure the entire aviation sector to make Nairobi a regional hub, creating more jobs for Kenyans and to grow our economy,” Mr Pkosing told the Sunday Nation.

“I aim to deliver the aviation bill in the earliest time possible, latest by the end of August. We are committed to ensuring the airline receives the necessary support to reclaim its lost glory. This is a critical Jubilee agenda to rescue our aviation in the post-Covid-19 pandemic era.”

In July last year, the Transport committee recommended the nationalisation of KQ, creation of an aviation holding company and tax exemptions as ways of saving the airline’s dwindling fortunes.


PROPOSED ENTITIES

The Pkosing report noted that putting the three aviation bodies under one umbrella is the same model the Ethiopian and Egyptian governments have used to turn around their national airlines. Ethiopian Airlines and EgyptAir have given Kenya Airways stiff competition.

The bill seeks to provide for the establishment of the National Civil Aviation Council, Kenya Aviation Corporation and its operating entities.

The Kenya Aviation Corporation will, among others, advise the government on matters relating to the development of the Kenya aviation sector and its promotion.

The bill proposes a governing body of the corporation consisting of the Attorney-General, Cabinet Secretary for Transport and the principal secretary, a chief executive officer, and a managing director for both Kenya Airways and KAA.

BOARD MEMBERS

In addition, the governing body will also have four non-executive board members appointed by the Cabinet secretary.

The chairperson and the non-independent executive board members will hold office for a period of three years and will be eligible for reappointment for one further term of three years.

To be appointed as the chairperson of the board, a person must  holds at least a bachelor’s degree in aviation, business administration, finance, audit, engineering or other related fields.

Under the bill, there will be an initial share capital of Sh66 billion to KAA. It will be divided into 66 million ordinary shares as may be varied from time to time in accordance with the provisions of the 2015 Companies Act.

The bill also proposes the establishment of the Kenya Aviation Corporation as a holding corporation and its operating entities including subsidiaries.

A National Aviation Council will be set up whose function will include integrating policies relating to the aviation sector and other sectors of the economy.

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