Investors must pay off KQ debts, not taxpayers: MPs

Parliament wants Kenya Airways debts shared by investors and not paid by taxpayers alone when the nationalisation of the airline starts after adoption of the Transport committee report.

MPs on Thursday concluded the debate on the report of the House team tasked with looking into the Privately Initiated Investment Proposal (PIIP) as a way of turning around the dwindling fortunes of the national carrier. Majority supported nationalisation of KQ.

However, the question on the adoption of the report was delayed; it will be put forward when the National Assembly resumes its sittings on July 23.

HEAVY BURDEN

Most of the MPs who support the State takeover of KQ said that in the process of settling debts, the burden should not be borne by taxpayers only.

The lawmakers noted that taxpayers cannot be made to pay millions of shillings for the management’s mistakes.

“When the government will be negotiating with debtors, all the money will not be paid by the people of Kenya but will be shared,” said Transport committee chairman David Pkosing (Pokot South).

Should MPs adopt the report, the government will have to pay all of KQ debtors.

The troubled airline owes CBA Group Sh3.1 billion, Equity Bank Sh5.2 billion, National Bank Sh3.5 billion, Co-operative Bank Sh3.3 billion, DTB Bank Sh3.3 billion and KCB Group Sh2.1 billion.

Kenya Airways, which posted a Sh7.55 billion net loss for the year ended December 2018, had pegged its survival in operating JKIA for 30 years, a proposal rejected by the Transport committee.

RESPONSIBILITY

Seme MP James Nyikal said it would be unfair to pass the burden on to the public.

“It would be unfair for the people of Kenya to pay private investors money which they put in the airline,” Mr Nyikal said.

Mr Nyikal also said the airline’s past management should take responsibility for the losses.

Other MPs who supported the team’s recommendations include Mr Charles Ngusya (Mwingi West), Mr Elisha Odhiambo (Gem), Ms Eve Obara (Kabondo Kasipul) and Ms Catherine Waruguru (Laikipia).

RECOMMENDATIONS

The report tabled in the House in June recommended nationalisation of KQ, formation of an Aviation Holding Company (AHC) and tax exemptions as ways saving the dwindling fortunes of the carrier.

It also recommended that Kenya Airports Authority (KAA), Jomo Kenyatta International Airport (JKIA) and Kenya Airways be put under the Kenya Aviation Holding Group (KAHG) as a means of consolidating profits.

The report noted that the idea of putting the three aviation bodies under one umbrella was similar to the model that the Ethiopian and Egyptian governments used to turn around their national carriers.

“The committee considered submissions by stakeholders and noted that the PIIP does not present a viable option for restoring Nairobi as the civil aviation hub of choice in Africa and treating KQ and JKIA as strategic national assets,” it also stated.

INDEPENDENCE

The committee also proposed that JKIA become a parastatal independent of the Kenya Aviation Authority.

In a bid to achieve this, the team proposed amendments of the Kenya Airports Authority Act to transfer the management and assets of JKIA to the JKIA Company.

Mr Pkosing warned that if nothing is done to boost the aviation sector, the government and the people of Kenya stand to lose the most as Kenya Airways debtors enjoy a sovereign guarantee of Sh75 billion.