Treasury yet to receive the last of the nasty invoices from France Telecom

PHOTO | FILE Telkom Kenya’s pay phone booths, which are now a symbol of a bygone era.  NATION MEDIA GROUP

In Summary

• The irony of the donor mandated privatisation of Telkom Kenya is that the winning bidder was government-owned France Telecom
• True, Telkom and KR were a drain on the Treasury before privatisation. They still are. The difference is that then we at least had something to show for the money

PRIVATISATION with Keguro Joe Muhindi

Has the Treasury received the last of the nasty invoices from France Telecom? Why is it that these bills always end up being paid in spite of initial expressions of shock and disbelief?

It has now become a yearly ritual. With one pretext or another, after announcing heavy losses when competitors Safaricom, Airtel and even the new-kid-on-the-block, yu, are wowing us with extraordinary profits, Orange goes to the Treasury with a begging bowl.

This time they want Sh6.6 billion, failure to which they threaten to bring down the hapless, helpless Kenyan taxpayer’s stake in Telkom Kenya — again.

As the trusted transaction advisor, the IFC was both the handsomely paid marriage broker and proud celebrant at the nuptials that have resulted in endless woes for one of the parties — we, the taxpayers.

The irony of the donor mandated privatisation of Telkom Kenya is that the winning bidder was government-owned France Telecom. Should we conclude what is good for the European goose is not necessarily good for the African gander? Or did we just fall victim to the reigning Thatcherite orthodoxy of the 1990s: public is bad, private is good?

It so happens that the same French government who took over the privatised parastatal owns one of the most dynamic and efficient railway operators in the world, the SNCF. Yet the same donors pushed us to privatise our own Kenya Railways. Some of you will recall with nostalgia the silky sheets on KR sleeper coaches, real silver cutlery, starched table cloths and five-course dinners on the Mombasa train before the Bretton Woods institutions introduced their structural adjustment programmes.

The IFC-driven process selected the Rift Valley Railways Consortium to “provide an efficient, reliable and integrated rail system and to invest $280 million in rehabilitating existing assets and a further $42 million in new rolling stock…” What a mockery! They didn’t even pay the modest signing fee of $3 million before embarking on an asset stripping spree.

 As for performance, from 4.3 million tonnes of cargo a year in the 1980s, the railways can barely move 1.5 million tonnes today, to say nothing of almost non-existent mainline passenger traffic. Before the concession, the railways used to pick up 15% of the cargo from Mombasa port. The objective was to rapidly reach the 50% mark to ease the deterioration of roads by heavy trucks. Transport Secretary Michael Kamau laments that this is down to a paltry three per cent.

DRAIN ON THE TREASURY

True, Telkom and KR were a drain on the Treasury before privatisation. They still are. The difference is that then we at least had something to show for the money; now only the bruises from an abusive IFC-brokered marriage. Was the state’s transaction advisor twice over derelict, incompetent or, worse, compromised, if only by the blinkered, dogmatic pursuit of a peculiar ideological purpose?

In spite having taken over Telkom debts to the tune of Sh30 billion to beautify the bride for the French suitor, the Treasury was within the year blackmailed into providing a Sh2.5 billion shareholder loan and loan guarantees to local banks for billions more. Sadly, these are largely still outstanding after several roll-overs.

Soon after, oblivious to IFC’s due diligence, the Frenchman invoked “missing assets” to whittle down our shareholding from 49 to 30 per cent and got the concession to manage the Teams fiber-optic backbone. Now the gallant Gaullois is back again with a “generous” invite to the government to raise its shareholding by paying, oh, just Sh6.6 billion! Some nerve!

It’s the giver who sets the limit, not the receiver. And unless the giver does so, there may be no end to the demands. Rather than complain about the preposterous requests for more, he should just close the tap, period. That’s what Henry Rotich, the Treasury Secretary has just done by, for once, telling Telkom CEO Ghossein “Non, merci!” Now isn’t that a deserving EGH at the next round of National Honours?

Aren’t we by our silence complicit in our exploitation? The world, said Einstein, will not be destroyed by evil doers, but by those who watch them and do nothing about it. Is there no righteously indignant lawyer out there to file a suit against the IFC?