sent by Robert Onyango

Officials defend Telkom deal

Story by BERNARD NAMUNANE

Publication Date: 11/16/2007

Government technocrats on Thursday rushed to allay fears over the sale of Telkom Kenya declaring it a clean deal.

And they warned the ODM leadership against making allegations that are likely to scare away investors who were out to contribute to the country's development.

They said some of the ODM leaders making criticising the deal were in the Cabinet when it was approved.

Investment Secretary Esther Koimett, Financial Secretary Mutua Kilaka and Information Permanent secretary Bitange Ndemo termed the claims by ODM that the sale of Telkom would lead to a Sh420 billion loss to the taxpayer as baseless.

Interest of public "As civil servants who have a duty to the public, we have sat for long hours and thought through the process privatising Telkom. We are doing it in the interest of the public who pay taxes and the future of Telkom," stated Ms Koimett.

"We have taken care of all the stakeholders and much more so we are giving the public a good deal in this transaction," she added.

Before heading to present his nomination papers to the Electoral Commission on Wednesday, ODM Presidential candidate Raila Odinga and Pentagon member William Ruto claimed the Government was hurriedly selling the telecommunications firm to finance Party of National Unity campaigns.

Mr Odinga warned that should he win the elections, he would not honour the deal whose bids are being opened on Friday.

"We in ODM take seriously all the deals that are being done at the eleventh hour by this Government and are meant to siphon money from the public coffers. We want to warn that we will not be obliged to continue with them (deals) " we will not honour it," he said. On Friday, Ms Koimett and Dr Ndemo said it was wrong for ODM leadership to make allegations without seeking information from the technocrats working on the transaction.

"If ODM leaders, who we think want the best for this country, had bothered to come to us, we could have sat with them down to explain how the process was being handled. Each and every stage has received Cabinet approval and some of those in ODM were in the Cabinet by the time," said Ms Koimett.

The party was raising a red flag over the sale of a majority stake in the key parastatal to a strategic investor, which entered the most crucial stage on Monday this week when the bids opened.

The debt-ridden Telkom Kenya is now valued at Sh14 billion, but there are debts, including to the firm's pension fund (Sh10 billion), Kenya Revenue Authority (Sh36.3bn) and a syndicate of banks (Sh5.8bn).

The four firms that submitted bids are France Telkom, Reliance of India, Telkom South Africa and Libya Africa Investment Portfolio (Lap) Fund.

Ms Koimett said Telkom was being privatised without the 60 per cent stake it holds in Safaricom to ensure that the investor who takes over the telecommunications company transforms it into a profit making outfit. Its ownership in the mobile service provider was being transferred to the Finance Permanent Secretary, the custodian of public shares in corporations.

Compete effectively

"The Government wanted to get an investor who is interested in Telkom because they see value in Telkom and have plans to make it compete effectively. This is why Telkom is being sold without its interest in Safaricom," she said.

But in exchange, the Treasury was giving Telkom Sh64 billion to clear its balance sheet that is bloated with a debt of over Sh60 billion which it owes to the pensioners, staff creditors and share holders.

"The pension deficit and the syndicated loan are funded as part of the Sh64 billion restructuring costs of Telkom. We want to hand over a company with a clean balance sheet," she said. On claims that the process was being rushed, the officials said it started in 2004 when a consulting firm was hired to conduct a study on how it should conducted.