Inside Kenya Kwanza plan to end era of bailouts for State firms

Kenya Airways (KQ) plane at the JKIA. [Edward Kiplimo, Standard]

This is even as the incoming administration said it recognises the carrier as a strategic asset.

"Before it ran into difficulties a few years ago, Kenya Airways had demonstrated that Kenya could become a major African and even global aviation hub. Kenya Airways' financial challenges are a reflection of internal strategic and managerial mistakes rather than the market prospects," says the coalition.

"Kenya Kwanza is persuaded that the national airline is a strategic asset that should not be allowed to fail. At the same time, it is not financially prudent to maintain Kenya Airways on life-support indefinitely.

"Kenya Kwanza commits to developing a turn-around strategy within six months. A critical plank of this strategy will be a financing plan that does not depend on operational support from the Exchequer beyond December 2023."

Kenya Kwanza also commits to turning around Kenya Power. In doing so, Dr Ruto will be undoing the mess he, together with outgoing President Kenyatta, created in their bid to increase electricity access through the Jubilee administration's last-mile connectivity programme.

Under the programme, households and businesses connected to the national electricity grid increased to 8.8 million in 2021 from 2.3 million in 2013 on account of the Last Mile Connectivity Programme. The programme, analysts have noted in the past, has been the undoing of Kenya Power. Being more of a social than a commercial venture, the government was supposed to foot the bill for the cheap connections, but circumstances saw Kenya Power bear the cost, with the expectation the government would refund the money.

There were, however, delays in the refunds, resulting in Kenya Power taking a hit. To bridge the gap in finances, the company had to borrow and in some instances, these were short-term costly loans that have had a huge impact on its financials. At the same time, many of the new connections have not been using much power, and this meant little or no increase in income for the company despite the expansion in the network and customer numbers.

"The connectivity drive has come with some challenges. Consumption has not risen as expected, while operational costs have increased, and this has affected Kenya Power's financial performance. Partly as a result of these challenges, Kenya Power's responsiveness to consumers has deteriorated," notes the Kenya Kwanza team.

Kenya Power offices along Harambee Avenue, August 5, 2022. [Jonah Onyango, Standard]

It further notes that the company will no longer undertake programmes that are social and developmental but will be freed up to focus on its core commercial aspect of the sale of electricity.

"We will delink government development initiatives, leaving Kenya Power to operate on commercial principles. A policy, regulatory and financing framework for off-grid community-owned development projects (mini and micro-grids) will be instituted," reads the economic plan.

Treasury recently told IMF that it has undertaken an in-depth financial evaluation and identified a financing gap of Sh383 billion over the next five years for some 18 SOEs.

Besides KQ and KPLC, the COB also identified three of the largest public universities, - the University of Nairobi, Kenyatta University and Jomo Kenyatta University of Agriculture and Technology - as a drain on public coffers.