The Privatization Act 2025 is Set to Overhaul Kenya’s State Asset Sale Rules

President William Ruto signed the much-anticipated Privatization Act 2025 on October 15th, replacing the 2005 law and creating a new framework for the sale of state-owned enterprises.

• •The law transfers full control of privatization to the National Treasury, establishes a new Privatization Authority, and subjects every sale to parliamentary and Cabinet oversight.
• •The new law will now govern the planned privatization of the Kenya Pipeline Company (KPC), the first major transaction to be executed under the updated framework.
• •The law moves Treasury closer to the government's plan to offload multiple state corporations, mainly to plug revenue gaps, revive the stock market, and to promote corporate efficiency.

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A New Authority and Legal Foundation

The Act anchors privatization in Kenya’s constitutional and fiscal principles.

• •It requires transparency, efficiency, and value for money under Articles 10 and 201 of the Constitution.
• •It defines privatization as any transfer of assets or liabilities of a public entity, including government shareholding, to non-public owners.
• •The law’s purpose extends beyond raising revenue. It is designed to support fiscal management, improve service delivery through private capital, strengthen corporate efficiency, deepen capital markets, reduce conflicts between regulation and ownership, and expand private participation in the economy.

The new Privatization Authority replaces the former Privatization Commission as the implementing agency.

• •It will identify, value, and execute divestitures. The Authority will also be a corporate body with power to sue, hold property, and enter contracts.
• •Its board will include a presidentially appointed chairperson, the Principal Secretary in charge of Privatization, the Attorney General or representative, six independent professionals, and the Managing Director as an ex-officio member. Members serve three-year terms, renewable once.

Eight-Year Programme and Sale Procedures

The Cabinet Secretary for the National Treasury will prepare a rolling Privatization Programme, valid for eight years and subject to Cabinet and parliamentary approval within 60 days.

• •The programme will list all public entities for sale, explain the rationale, estimate revenues, and show benefits to the economy.
• •It must be developed through consultation with employees, experts, and the public.
• •Once gazetted, it becomes binding and can only be amended through the same process.

Privatization will take place through four methods: initial public offerings, public tenders, pre-emptive rights, or other Cabinet-approved methods. Every sale must include an independent valuation.

Implementation will be managed by a Steering Committee made up of Treasury and line-ministry officials and two Authority board members.

• •Once an entity is gazetted for sale, it cannot sell or acquire assets or incur major liabilities without Treasury approval.
• •It also cannot extend credit to buyers.

Investor participation is open to both local and foreign investors, but the Treasury may set minimum Kenyan ownership levels. Government-owned corporations are barred from buying state assets, except for pension or insurance funds investing for members.

Exemptions, Oversight, and Proceeds

The Act excludes several types of transactions from its scope.

• •It does not apply to secondary market share sales, rights issues, internal reorganizations that dilute public ownership, sales by pension or insurance funds, or divestitures by government-linked corporations where state ownership is below 50 percent.
• •County governments are also exempt.

All proceeds from government share sales must be deposited in the Consolidated Fund.

• •If a public entity sells its shares, proceeds must first be held in an interest-bearing account and transferred to the Fund within 90 days.
• •The Authority must keep full records of every privatization and submit annual reports to the Treasury within three months of the financial year’s end.
• •The Treasury must table the report in Parliament.

Appeals, Penalties, and Institutional Transition

The law also creates a Privatization Appeals Board to resolve disputes.

• •Reviews must be filed within 15 days of a decision, and appeals resolved within 30 days.
• •The Board can annul a transaction, order a repeat process, or award costs. Final appeals go to the High Court.

The law enforces confidentiality of information and introduces penalties of up to KSh 5 million or five years in prison for falsified valuations, insider leaks, or misleading disclosures.

It also repeals the Privatization Act 2005, transferring all assets, liabilities, and staff of the former Commission to the new Authority.

• •Ongoing privatizations listed under Gazette Notice No. 8739 of 2009 will continue under the new framework.
• •By creating a professional agency, enforcing valuations, and embedding disclosure, the Privatization Act 2025 establishes Kenya’s first fully rule-based privatization system.
• •It positions asset sales as a structured policy instrument for fiscal discipline, investor confidence, and market growth.

https://kenyanwallstreet.com/kenya-pipeline-company-valued-at-ksh-102bn-by-sib