Treasury Cabinet Secretary John Mbadi has raised a serious red flag over the government’s ongoing privatisation strategy for the Kenya Pipeline Company, saying that a recent directive requiring all public contracts to be routed exclusively through the State’s e-tenders portal could undermine the sale process.

The warning comes amid mounting legal and procedural hurdles that threaten to delay, and possibly derail, the planned transaction.

According to Mbadi, Kenya Pipeline Company has reportedly applied for a waiver from the tenders portal requirement, citing concerns over the stipulation’s compatibility with the urgent timelines of the proposed privatisation. He explained that the directive, while intended to enhance transparency in public procurement, may hamper the fast-tracked sale of a 65 percent stake in the energy parastatal.

The sale of KPC is a central pillar of the government’s privatisation agenda and is billed as a key instrument for raising approximately Sh100 billion to support the 2025–26 budget and reduce fiscal pressure without raising taxes.

The move also aligns with broader ambitions to modernise and attract private capital into Kenya’s critical infrastructure sectors.

The tender portal order, however, risks creating a bottleneck by introducing additional procedural steps into what the Treasury envisaged as a streamlined sale. Mbadi’s disclosure underscores how policy shifts even those aimed at strengthening governance can have unintended consequences that ripple into major economic plans.

Compounding the challenge, the sale has already been thrown into legal uncertainty. The High Court issued conservatory orders restraining the government from proceeding with the sale of Kenya Pipeline shares under the current framework.

The injunction, granted following a petition by the Consumers Federation of Kenya, has effectively frozen any transfer, allocation or disposal of KPC shares pending further hearing scheduled for early September.

The convergence of legal action and procurement red tape now presents a dual-layered threat to the privatization timetable. Both Parliament and the Judiciary have signalled heightened scrutiny of the process, with Members of Parliament demanding that fiscal mismanagement be tackled before any sale is pursued.

In the coming days, Treasury officials will need to navigate a delicate balance addressing legal and procedural concerns while preserving the strategic intent of the privatisation.

The outcome will not only shape the future of the Kenya Pipeline Company but also influence investor perceptions of Kenya’s reform momentum.