The Senate has faulted the recent executive order by the president establishing the Kenya Transport and Logistics Network (KTLN) saying that it did not follow the law. Mohammed Faki, the Mombasa county Senator issued a statement in the Senate yesterday saying that this formation could only be legitimate if it was backed by new legislation.
The network brought 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,” the state said in a statement last month.
But the parliament said that the government could not merge the three organisations without new legislation since each was governed by an independent Act of parliament. This should also involve public participation, According to Stewart Madzayo, Kilifi Senator, due to the impact this move will have on the Coast economy.
In merging the three agencies, the government said that the new structure was 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 government statement added.
The new framework would also allow 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,” the statement read.
Consequently, the four State agencies were transferred to the National Treasury in line with the recommendations of the Presidential Task Force on Parastatal Reforms.
In the new arrangement, the ICDC was supposed to 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 would be required to enter into a joint operations agreement within 30 days that would reorganize individual entity structures, resources, operations and services.
“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 would 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 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,” said the state.
