The court has, however, suspended the declaration for six months to give Parliament time to amend the law before it takes effect.
The case stemmed from a challenge to privately initiated proposals involving the Jomo Kenyatta International Airport (JKIA) and Kenya Electricity Transmission Company (KETRACO) projects, both of which had already been cancelled by the time the matter came up for hearing.
The government and other respondents argued that the case should be thrown out altogether since there was no longer an active project to stop.
The court disagreed, holding that the cancellation of the two projects did not resolve the broader constitutional questions at stake, including whether the process used to approve PPP projects was lawful, whether public money was adequately protected, and whether government agencies were being properly held accountable.
At the heart of the case was whether the PPP Act gives Parliament sufficient control over projects that could ultimately leave taxpayers footing large bills.
The petitioners argued that certain sections of the Act allow the Executive and the PPP Committee to make decisions that ought to involve Parliament.
The court agreed with them to a significant extent, ruling that Parliament has a constitutional duty to oversee how the government collects and spends public money, and that this duty cannot be sidestepped simply because an arrangement is structured as a PPP.
According to the ruling, the government cannot use a PPP arrangement to avoid parliamentary approval where the deal will eventually require taxpayers’ money or create a financial obligation for the country.
This could arise where government is required to make payments to a private company, extend guarantees, contribute funding to a project, or take on debt and other liabilities.
The court noted that it does not matter whether a project is labelled a PPP or whether private investors provide the initial capital.
What matters, the judge said, is whether government and, by extension, taxpayers are ultimately taking on a financial obligation.
Because PPP arrangements are typically long-term and can affect public finances for years, the court held that they cannot be kept outside Parliament’s financial oversight, as required by the Constitution.
The court therefore declared Sections 59, 60 and 72 of the PPP Act unconstitutional, but only to the extent that they fail to provide for parliamentary approval where a PPP project creates government expenditure, guarantees, public debt or other public liabilities.
The ruling does not require Parliament to approve every PPP project individually.
Instead, the determining question is whether a project creates a financial obligation for the national government. Where taxpayers’ money, government guarantees, borrowing or other public liabilities are involved, parliamentary approval will be required.
The petitioners had also challenged provisions of the law dealing with privately initiated projects, arguing that they could allow government agencies to sidestep open competition when selecting private companies.
The court rejected this part of the challenge, ruling that the law may permit different procurement methods where there is proper justification.
It cautioned, however, that government agencies must still comply with the Constitution and cannot use a privately initiated proposal as cover to unfairly favour a particular company or avoid transparency, competition and value for money.
Although the court found the three provisions unconstitutional, it did not strike them down with immediate effect.
It instead suspended the declaration of invalidity for six months, giving Parliament time to amend the law and ensure that PPP projects involving public money or government liabilities are subjected to the required parliamentary oversight.
The case will return to court on May 11 to determine whether Parliament has complied and to receive further directions.
