Privatisation Act 2025 is constitutional, High Court rules

 

The KICC is among parastatals lined up for privatisation. [File, Standard]

The High Court has declared the Privatisation Act, 2025, constitutional and valid, dismissing a petition challenging the law and allowing the government to proceed with the planned sale of state-owned enterprises such as the KCC, Kenya Seed Company, and the KICC to proceed.

In a judgment delivered virtually on Thursday, Justice Bahati Mwamuye said the petitioners had failed to prove that the law violated the Constitution and affirmed that meaningful public participation was conducted by the National Assembly prior to the enactment of the law.

“The petitioners have failed to discharge the burden of proving a constitutional violation. Therefore, the Privatisation Act 2025 is hereby declared to be constitutional and valid in its entirety,” Justice Mwamuye stated.

“This court is acutely conscious of the profound public interest that attaches to the privatisation of state-owned enterprises. Such assets constitute the sovereign wealth of the Republic of Kenya, held in trust for the people of Kenya, both current and future generations. Their disposal must be, and must be seen to be, conducted with the highest standards of integrity, transparency, and accountability.”

The petition had been filed by Inuka Kenya Ni Sisi! and Transparency International Kenya, together with other civil society organisations, who argued that the Privatisation Act lacked transparency and risked the undervaluation of public assets.

The groups expressed concerns that the law could create parallel budgetary systems, allow privatization without proper audits, and transfer strategic national assets to private, unaccountable entities.

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“The law paves the way for the dangerous and unconstitutional transfer of sovereign power from the people of Kenya to private, unelected, and profit-driven entities,” the petitioners stated in their filings.

“Privatising critical infrastructure such as water, energy, ports, transport systems, and telecommunications will place essential national assets in the hands of actors whose primary responsibility is profit, not public welfare.”

The petitioners also warned that privatisation could reduce government capacity, create private monopolies, lead to undervaluation of strategic assets, and threaten socio-economic rights under Article 43 of the Constitution, including access to health, education, housing, and sanitation.

Kenya Pipeline Company storage facilities in Nairobi. The Government plans to sale KPC through an Initial Public Offer. [File, Standard]

In his judgment, Justice Mwamuye emphasised that the court’s role is not to endorse or reject privatisation as an economic policy but to ensure that legislation is implemented lawfully and within constitutional limits.

“The wisdom or folly of privatisation is a question for the political branches: the executive, which proposes policy, and the legislature, which approves it. The court's role is limited, but constitutionally vital, ensuring that whatever policy is chosen is implemented through lawful means,” he said.

The court found that all provisions of the Act impugned by the petitioners, including Sections 7, 21, 22, 23, 31, 32, 34, 35, 36, 37, 38, 39, 43, 45, 54, 55, 65, 67, and 71, were consistent with the Constitution.

Justice Mwamuye also held that the law contains adequate systems of checks and balances to protect public assets, and that the structure of the Privatisation Authority is constitutional.

“The appointment of its members by the Executive does not violate Articles 10, 73, or 232 of the Constitution. The Cabinet Secretary's discretion is structured, criteria-bound, subject to judicial review and parliamentary oversight,” the ruling states.

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The petitioners’ requests for mandatory injunctions, including involvement of the Auditor General in pre-transaction valuations and the publication of departmental reports, were declined.

Justice Mwamuye noted that proceeds from privatisation will be deposited into the Consolidated Fund and managed according to the Public Finance Management Act, 2012.

“A declaration is hereby issued that all proceeds from privatisation must be deposited into the Consolidated Fund and managed in accordance with the Public Finance Management Act, 2012 and Articles 201 and 206 of the Constitution. The Privatisation Act 2025, by Section 54, already so provides," the judge directed 

Several of the petitioners' grounds were additionally struck out under the doctrine of res judicata, having been previously determined in related proceedings before the then High Court Justice Chacha Mwita.

The court dismissed the petition in its entirety but recognised that it was public interest litigation brought in good faith, ordering that each party bear its own costs.