A state agency advising the government on privatisation
spent Sh91.88 million on advisory services but only succeeded in privatising
one entity in 16 years.
Privatisation Commission is a corporate body, which advises
the government on privatisation, implements privatisation programmes and
facilitates implementation of government privatisation policies.
“The commission has, therefore, not effectively achieved its
core mandate on privatisation of public enterprises despite having a fully
constituted board in the financial year under review,” said Auditor General
Nancy Gathungu.
The report for the period ending June 30, 2024, says the
commission currently has a privatisation programme with 25 enterprises
identified for privatisation.
However, the report does not indicate the entities for
privatisation.
Despite the slow progress, the commission has spent a
whopping Sh91.88 million on consultancy services.
“This has resulted in a significant increase in the cost of
contracted services acquired from consultants assisting the commission in
production and updating of privatisation status reports,” the report says.
“It is therefore not clear whether value for money was
realised for an expenditure of Sh91.88 million spent on Transaction Advisory
Services as disclosed in Note 11 to the financial statements.”
In November last
year, the government listed several state-owned properties and companies for
privatisation.
They include Kenya Hotel Properties Limited, National Oil
Corporation, Kenya Pipeline Company, Kenyatta International Conference Center,
Kenya Seed Company and Mwea Rice Mills.
Others are Numerical Machining Complex, New Kenya
Cooperative Creameries, Kenya Vehicle Manufacturers Limited and Western Kenya
Rice Mills Limited.
President William Ruto has defended the move to privatise the
entities.
He said the decision was arrived at based on a 10-year-old
report, which recommended disposal of government assets.
“We are spending billions of shillings sustaining companies,
we have 350 public entities that just take from the budget… so we are going to
make a decision,” Ruto said.
He exuded confidence that the decision to sell the
parastatals was right and the move will be appreciated in 10 years.
“I am just giving you an example of why we must save Kenya
and I promise you we are going to move this country in the right direction, we
are going to make the difficult, smart decision,” Ruto said.
However, the decision triggered a public backlash from
Kenyans. But Ruto said that he was ready to face the consequences.
“We are going to make those decisions because we must change
Kenya,” he said.
According to the audit report, the privatisation commission
is grossly underfunded.
During the year under review, it spent Sh344.87 million
against an approved budget of Sh616.48 million on operational and capital
expenditures resulting in an under-expenditure of Sh271.61 million or 56 per
cent of the budget.
“The under-expenditure affected the planned activities and
impacted negatively on service delivery to the public,” the report says.
Further, the commission has not migrated its procurement
systems to the e-procurement platform.
