All state transport parastatals merged


By Jacktone Lawi

His Excellency President Uhuru Kenyatta has today issued an Executive Order establishing a framework for the management, coordination and integration of public port, railway and pipeline services under the Kenya Transport and Logistics Network (KTLN).

The network brings together Kenya Ports Authority (KPA), Kenya Railways Corporation (KRC) and Kenya Pipeline Company Limited (KPC) under the coordination of the Industrial and Commercial Development Corporation (ICDC).

KTLN will leverage on the efficiencies and synergies of the four State agencies so as to achieve Kenya’s strategic agenda of becoming a regional logistics hub.

Further, the new structure is expected to lead to the lowering of the cost of doing business in the country through the provision of port, rail and pipeline infrastructure in a cost effective and efficient manner, and within acceptable shared benchmark standards.

The new framework also allows for the centralization and coordination of operations without amending the existing laws or causing undue disruption to the legal structuring of the State entities. This helps to secure comfort with the concept, and utilize the experience to guide the development of a more permanent legally structured organization.

Consequently, the four State agencies have been transferred to the National Treasury in line with the recommendations of the Presidential Taskforce on Parastatal Reforms.

In the new arrangement, the ICDC will act as a holding company to the three agencies, and be responsible for the management of the State’s investments in Ports, Rail and Pipeline services.

Going forward, the State agencies are required to enter into a joint operations agreement within 30 days that will reorganize individual entity structures, resources, operations and services. The reorganization will help to establish a seamless and coordinated national transport and logistics network.

In order to secure his vision for the Sector, His Excellency the President has reorganized the Boards of Directors of the four State entities.

The ICDC Board will be responsible for securing the achievement of the commercial vision and objectives of KTLN, through the Board of Directors of each entity so as to operate as a single coherent unit. For this reason, the Board of ICDC is exempted from the requirements of Mwongozo on multiple directorships.

Further, the National Treasury has been tasked to strengthen its internal capacity by securing the necessary technical skills and competencies needed to effectively oversee investment portfolio management, and the setting up, monitoring and reporting of the financial performance of commercial State corporations.

In view of the above reforms, the proposed merger of the ICDC into the Kenya Development Bank has been postponed. However, ongoing transactions involving KPC, KRC and KPA will proceed uninterrupted.

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