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State unveils Sh36bn Covid bailout for KQ, Kenya Power

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State unveils Sh36bn Covid bailout for KQ, Kenya Power


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Treasury Cabinet Secretary Ukur Yatani. FILE PHOTO | NMG

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Summary

  • The government will spend Sh36 billion to bail out key parastatal which have sunk into losses as a result of Covid-19 economic fallout.
  • The National Treasury said companies including Kenya Airways, Kenya Power, and several universities need urgent support after their revenues dropped sharply during the pandemic.

The government will spend Sh36 billion to bail out key parastatal which have sunk into losses as a result of Covid-19 economic fallout.

The National Treasury said companies including Kenya Airways, Kenya Power, and several universities need urgent support after their revenues dropped sharply during the pandemic.

International Monetary Fund (IMF) has revealed the bailout plans in the agreements it has reached with the government as conditions for offering Kenya the latest Sh255 billion loan.

“As a result of immediate requirements that have been identified, we plan to spend a total of Sh36 billion on extraordinary SOE support in FY2020/21. All such extraordinary support is being based on careful evaluation of need and accompanied by steps to ensure that the entities are put on a sound footing,” Kenyan authorities said.

The agreements also reveal that Kenya has committed to audit nine key parastatals and reform them, according to IMF guidelines to ‘rationalise government involvement in the sector and ensure the viability of State Owned Enterprise (SOEs)’ continued operations’.

These include Kenya Airways, Kenya Airports Authority, Kenya Railways Corporation, Kenya Power and Lighting PLC, Kenya Electricity Generating Company PLC, Kenya Ports Authority, and three of the largest universities.

For Kenya Airways, the government has committed to hire an independent consultant to audit the airline and find the cheapest way of restructuring it.

The Covid-19 shock…

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