President William Ruto has signed the Government Owned Enterprises Bill 2025, into law, marking a significant overhaul of how State-owned entities in Kenya are established, governed, and managed. The new Act aims to enhance corporate governance, transparency, and, crucially, the commercial viability of these institutions.

The key feature of the new legislation is the transition of existing Government Owned Enterprises (GOEs)—formerly known as State Corporations—into public limited liability entities under the Companies Act, Cap. 486.

Under this new dispensation, a Government Owned Enterprise (GOE) is strictly defined as a self-financing and self-sustaining company engaged in commercial activities in one of the following circumstances:

  • It is wholly owned by the Government.
  • The Government owns more than fifty percent of the share capital.
  • The Government has assigned financial and operational powers to the entity to carry on a business activity.

The Act mandates a commercially focused management framework:

  • The Board of each GOE is required to adopt an annual business plan.
  • This plan will form the basis of the annual performance contracts signed between the Cabinet Secretary for the National Treasury and the GOE’s leadership.

One of the most impactful sections of the new law is Section 29, which addresses the tricky balance between commercial viability and public mandate.

Key Provision Implication
Section 29: It provides that the National Treasury Cabinet Secretary shall not assign public service obligations to listed GOEs unless they are specifically provided for under the Act. This is intended to stop GOEs from subsidizing non-commercial government mandates using their own commercial revenue, which has historically led to financial losses and reliance on the Exchequer.
Allowed PSOs: The law allows the Government to assign specified non-commercial public service obligations to some GOEs. PSOs, by definition in the Bill, are non-financially viable activities that require full compensation.
Funding: The discharge of such obligations must be funded through a subsidy, or budgetary allocations, and carried out on a separate operational and accounting basis. This ensures that the commercial performance of the GOE is not artificially inflated or deflated by government mandates.

The implications of Section 29 are immediately apparent for entities like the Kenya Power and Lighting Company Limited (KPLC), which is listed as a GOE.

The Last Mile Connectivity Project (LMCP), which saw the launch of Phase IV at the start of 2025, is a major government initiative aimed at accelerating electricity access in rural and underserved areas.

  • LMCP as a PSO: Connecting households in remote areas, especially those that generate low revenue, is often non-financially viable for a commercial entity like KPLC. This makes the LMCP a classic Public Service Obligation (PSO).
  • The Conflict: Under the new Act, KPLC cannot use its own commercial revenues to sustain such a project without full and separate compensation from the National Treasury. Indeed, Parliament and sector stakeholders have long noted that KPLC is owed billions by the government for unreimbursed costs related to rural electrification.

The move strongly suggests that Rural Electrification and Renewable Energy Corporation (REREC), which already undertakes significant Last Mile Connectivity projects, will be formally designated as the primary entity for these non-commercial ventures.

  • REREC’s Mandate: REREC’s core mandate is to manage the Rural Electrification Programme Fund and promote renewable energy. It is already actively rolling out last-mile projects, often targeting public facilities and marginalized areas.
  • Legislative Intent: The spirit of the GOE Act is to commercialize KPLC. Consequently, the non-commercial activities will likely be transferred entirely to REREC or a similar entity, or KPLC will execute them only under strict, fully subsidized contractual agreements with the Government. This separation ensures that KPLC’s financial health truly reflects its commercial performance, while REREC focuses on the social mandate, funded by the relevant levy and budgetary support.

Schedule of Government Owned Enterprises

The Act formally lists the entities it governs, separating them into two main schedules.

FIRST SCHEDULE [s. 4(1)(b)]: LIST OF GOVERNMENT OWNED ENTERPRISES

No. Enterprise Name No. Enterprise Name
1. East African Portland Cement Company Limited 34. Kenya Petroleum Refineries Limited
2. Kenya Electricity Generating Company Limited 35. Kenya Post Office Savings Bank
3. Kenya Power and Lighting Company Limited 36. University of Nairobi Enterprises and Services Limited
4. Kenya Re-Insurance Corporation Limited 37. Western Kenya Rice Mills Limited
5. Agricultural Finance Corporation 38. Bomas of Kenya
6. Kenya Airports Authority 39. Chemelil Sugar Company Limited
7. Kenya Development Corporation 40. Golf Hotel Limited
8. Kenya Literature Bureau 41. Kabarnet Hotel Limited
9. Kenya Ports Authority 42. Kenya Biovax Institute Limited
10. Kenya Railways Corporation 43. Kenya Safari Lodges and Hotels Ltd
11. New Kenya Co-operative Creameries Limited 44. Miwani Sugar Company Limited
12. Agricultural Development Corporation 45. Mt. Elgon Hotel Limited
13. Kenya Seed Company Limited 46. Muhoroni Sugar Company Ltd
14. Kenyatta International Convention Centre 47. Mwea Rice Mills Limited
15. National Cereals and Produce Board 48. New Kenya Planters Cooperative Union Limited
16. National Housing Corporation 49. Nzoia Sugar Company Limited
17. Numerical Machining Complex Limited 50. Pyrethrum Processing Company of Kenya
18. Postal Corporation of Kenya 51. South Nyanza Sugar Company Limited
19. Rivatex East Africa Limited 52. Sunset Hotel Limited
20. Kenya Broadcasting Corporation 53. Commodities Fund
21. Kenya Veterinary Vaccine Production Institute 54. Kenya National Multi Commodities Exchange Limited
22. National Mining Corporation 55. Nyayo Tea Zones Development Corporation
23. National Oil Corporation of Kenya 56. School Equipment Production Unit
24. Consolidated Bank of Kenya Limited 60. Kibo Seeds Limited, Tanzania
25. Agro-Chemical and Food Company Limited 61. Simlaw Seeds Kenya Limited
26. Development Bank of Kenya Limited 62. Simlaw Seeds Rwanda
27. JKUAT Enterprises and Services Limited 63. Simlaw Seeds Uganda Limited
28. Jomo Kenyatta Foundation 64. Gatitu Tea Factory Limited
29. Kenya Fishing Industries Corporation 65. Kipchabo Tea Factory Limited
30. Kenya Industrial Estates Limited 57-59. GOEs provided in the Second Schedule
31. Kenya Meat Commission … …
32. Kenya National Shipping Line Limited 25. Agro-Chemical and Food Company Limited
33. Kenya National Trading Corporation Limited … …
SECOND SCHEDULE [s. 4(1)(c)]: STATE CORPORATION
No. Corporation Name No. Corporation Name
1. Agricultural Finance Corporation 10. Postal Corporation of Kenya
2. Kenya Airports Authority 11. Kenya Broadcasting Corporation
3. Kenya Literature Bureau 12. Kenya Veterinary Vaccine Production Institute
4. Kenya Ports Authority 13. National Mining Corporation
5. Kenya Railways Corporation 14. Kenya Fishing Industries Corporation
6. Agricultural Development Corporation 15. Kenya Meat Commission
7. Kenyatta International Convention Centre 16. Kenya Post Office Savings Bank
8. National Cereals and Produce Board 17. Commodities Fund
9. National Housing Corporation 18. Nyayo Tea Zones Development Corporation