Job losses, SGR loan emerge in plan to merge parastatals

Jobs may be lost in the proposed merger of three State corporations, a parliamentary committee has said.

Members of the National Assembly Finance Committee also raised concerns that the plan could be a scheme to use profit-making Kenya Ports Authority (KPA) to service loans the government borrowed to construct the Standard Gauge Railway (SGR).

President Uhuru Kenyatta has issued an Executive Order that will see KPA, Kenya Pipeline Corporation (KPC) and Kenya Railways Corporation (KRC) collapsed. In the event this happens, people will lose their jobs as the organisations will have some of their departments, including human resources, ICT and legal, also merged.

SGR has not yet started making profits that can be used to service the Chinese loans.

MPs Christopher Omulele (Luanda) and James Gichuhi (Tetu) asked Treasury CS Ukur Yatani to allay stakeholders’ fears over the merger process.

“This House rejected a proposal by the ministry on railway levy meant to help service the SGR loan. I think the arrangement is another attempt to have KPA to help service the loan,” said Omulele.

Gachuhi questioned the legality of the merger, saying it has been done in violation of various laws on the mandates of each of the three agencies. He said Treasury rushed to draft the agreement for the cooperation before looking at various Acts of Parliament.

“Don’t you think you should have enacted a legal framework before getting into the agreement? I think the way this has been done violates various Acts,” said Gachuhi.

“Another issue that needs clarification is the SGR loan. We know KRC has a loan; is it that you want KPA to pay the loans owed by KCR to the Chinese government,” Gachui asked.

But CS Yatani and the Director General Public Investment and Portfolio Management Stanley Kamau, who appeared before the committee on Wednesday, dismissed the claims of job losses and SGR loans.

The ministry said the arrangement was not a merger, but a “shared services” arrangement in some areas to improve service delivery.

“The loan we have is a sovereign one that is budgeted for by Treasury. It has nothing to do with profits made by the institutions,” said Kamau.

“There has been misconception that we want to merge the three institutions. They will remain, but with some shared services,” he said.

Yatani also allayed fears of job losses, saying the deal will in fact bring more opportunities.