Liberalise energy, transport sector to step up efficiency, Kenya advised

Containers at the port of Mombasa. The World Bank wants Kenya to liberalise key services in the energy and transport industries and urged Kenya to privatise the operation of international airports as well as the Port of Mombasa. The Port of Mombasa is plagued by chronic congestion. PHOTO/FILE 

In Summary

• In a report released last week, the institution urged Kenya to privatise the operation of international airports as well as the Port of Mombasa. 
• High electricity costs in the country and frequent power outages have been cited as a disincentive for investors coming to Kenya while the Port of Mombasa is plagued by chronic congestion.
• Members of Parliament in July passed a motion that paves the way for the introduction of a bill to end Kenya Power’s monopoly.

By MUTHOKI MUMO
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The World Bank wants Kenya to liberalise key services in the energy and transport industries as part of proposals to increase efficiency and improve the business climate.

In a report released last week, the institution urged Kenya to privatise the operation of international airports as well as the Port of Mombasa. 

Investment needs in these areas, the institution noted, outweigh the financial resources of the Kenyan government and of donors.

“The government should seek respected international operators to manage the key gateways, which could be in form of joint ventures with local investors,” read the report in part.

In energy, the World Bank said that introduction of competition in power distribution would ensure that end users have access to cheaper, more reliable electricity supply.

“Kenya can ensure security of supply through competitive processes (auctions and others) to sell electricity to financially viable distribution companies through long-term Power-Purchase Agreements (PPAs),” it says.

Chronic congestion

High electricity costs in the country and frequent power outages have been cited as a disincentive for investors coming to Kenya while the Port of Mombasa is plagued by chronic congestion.

Although the port was designed to handle about 250,000 twenty-foot equivalent units (TEUs), last year it handled about 900,000 TEUs.

On the other hand, the World Bank contents that services provided in Kenya’s four international airports are below global standards. A concession agreement with a private company could bring both international gateways up to par.

Under such an arrangement, the Kenya Ports Authority and the Kenya Civil Aviation’s Authority would have their duties reduced to regulatory roles only.

Proposals by the government to privatise the Port of Mombasa have received sharp opposition from some stakeholders.

The Dock Workers’ Union, in particular, has stood against this move saying that it would mean job losses for coastal residents.

Restricted to one buyer

In electricity, the World Bank is also lending its voices to a growing clamour that has been calling for competition in electricity distribution.

Although Kenya has opened up electricity generation to private sector players, these companies are still restricted to one buyer, Kenya Power, which then distributes energy across the country.

Members of Parliament in July passed a motion that paves the way for the introduction of a bill to end Kenya Power’s monopoly.