High Court Declares Parts of Kenya’s PPP Law Unconstitutional

NAIROBI, Kenya Sep 17 – The High Court has declared parts of Kenya’s Public-Private Partnerships (PPP) Act unconstitutional, ruling that Parliament must have oversight over PPP projects that create financial obligations for the national government.

However, the court has suspended the effect of the declaration for six months to allow Parliament time to amend the law.

The decision arose from a petition challenging the legal framework governing privately initiated PPP proposals, including projects involving the Greenfield International Airport (GKIA) and the Kenya Electricity Transmission Company (KETRACO).

Although the two projects had been cancelled by the time the petition was heard, the court declined to dismiss the case, holding that the cancellation did not resolve the broader constitutional questions raised by the petition.

The court considered issues concerning the legality of PPP approval processes, protection of public funds and accountability in the management of government financial obligations.

At the centre of the case was whether the PPP Act gives Parliament sufficient oversight over projects that could create significant financial obligations for the government.

The petitioners argued that certain provisions allowed the Executive and the PPP Committee to make decisions that should be subject to parliamentary approval.

The court agreed in part, holding that Parliament has a constitutional responsibility to oversee public finances, including government expenditure and public liabilities.

It ruled that the government cannot use a PPP arrangement to bypass parliamentary approval where a project creates a financial obligation for the country.

Such obligations may arise where the government is required to make payments to a private partner, provide guarantees, contribute public funds or assume debt and other liabilities.

The court said the fact that a project is structured as a PPP, or initially financed by private investors, does not remove the requirement for parliamentary oversight where public financial obligations ultimately arise.

The court declared Sections 59, 60 and 72 of the PPP Act unconstitutional to the extent that they fail to provide for parliamentary approval where a PPP project results in government expenditure, guarantees, public debt or other public liabilities.

The ruling does not require Parliament to approve every PPP project individually.

Instead, the requirement for parliamentary approval arises where a PPP arrangement creates a financial obligation for the national government.

This includes situations involving taxpayers’ money, government guarantees, borrowing or other forms of public liability.

The court noted that PPP arrangements are often long-term and can have significant implications for public finances, making parliamentary financial oversight necessary.

The petitioners had also challenged provisions governing privately initiated PPP proposals, arguing that the framework could enable government agencies to select private companies without adequate competition.

The court rejected this aspect of the petition.

It held that the law may permit alternative procurement methods where there are lawful and sufficient grounds for doing so.

However, public agencies must continue to comply with constitutional requirements, including transparency, fairness, competition and value for money.

The court cautioned that a privately initiated proposal cannot be used to unfairly favour a particular company or circumvent applicable procurement requirements.

Despite declaring the three provisions unconstitutional, the court did not immediately invalidate them.

Instead, it suspended the declaration for six months, giving Parliament time to amend the PPP Act and establish a framework that provides for parliamentary oversight of projects involving government expenditure and public liabilities.

The matter is scheduled to return to court on May 11 to assess compliance with the directions and receive further orders.

The ruling is expected to affect how future PPP projects involving public funds, guarantees, borrowing and other government liabilities are processed and subjected to parliamentary oversight.