Govt Reveals Plans to Dissolve 140 Parastatals
The government has announced intentions to shut down 140 underperforming State-owned enterprises as part of efforts to reduce public spending.
During the dividend cheque presentation ceremony at the Kenya Pipeline Company (KPC) headquarters on Wednesday, Treasury Cabinet Secretary Njuguna Ndung’u emphasized that the government intends to dissolve unprofitable parastatals, which impose a financial burden on taxpayers.
He elucidated that the government had poured over Ksh5.7 Trillion into the advancement of State-owned enterprises, yet this substantial investment did not yield corresponding returns.
As per the Treasury’s report, only a minuscule 0.13 percent of the funds were evident in the returns.
In addition to consuming public funds, the Cabinet Secretary clarified that the state-owned enterprises posed a significant burden due to the substantial accumulation of unpaid bills over time.
The computer scientist clarified that the outstanding invoices totaled 81.3%, leading to significant losses for the government.
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While justifying the dissolution, CS Njuguna noted “You have to understand that so much has been lost, on top of low returns we also have pending bills that need to be looked at so we have to find a way to minimize that.”
During the event, Energy Cabinet Secretary Davis Chirchir emphasized that all assets owned by government agencies needed to serve the interests of the Kenyan populace.
“We are seeking to ensure that the assets are working for Kenyans and we therefore thank the KPC Board for the gesture to give us the dividends,” explained Chirchir.
On Tuesday, the Kenya Pipeline Company complied with the President’s directive for State Agencies by issuing a Ksh5 billion dividend cheque to the Treasury, representing 80 percent of their profits.
Significantly, the directive has also sparked anxiety among public servants who are concerned about potential job reductions.
The state-owned enterprises will be added to a roster of other government-controlled companies that are transforming, with initiatives and procedures in motion to privatize additional underperforming corporations.
Govt Reveals Plans to Dissolve 140 Parastatals