Public Private Partnership Strategy and Performance of Public Sector Firms in the Electricity Sector in Kenya

Abstract

Public Private Partnerships (PPPs) are contractual agreements between a public agency or public- sector authority and a private-sector entity that allow for greater private sector participation in the delivery of public goods and services that leads to developing an environment that improves the quality of life for the general public. The study sought to identify the impact that the PPP strategy had on performance of public sector firms in Kenya‟s electricity energy sector. The study adopted qualitative approach. The study focused on six (6) public sector firms in the electricity sector in Kenya. Data was collected through face to face interviews by use of an interview guide. Content analysis was used to analyze the data. The study findings showed that PPPs were adopted mainly as a way of mitigating high cost of energy development projects. In addition, the study concluded that all the projects earmarked for delivery through PPPs are part of the government‟s long term development agenda. The study also concluded that the Ministry of Finance and Planning as well as the Ministry of Energy are critical to the success of Public Private Partnerships and that transaction costs varied with the highest being 15% while the lowest was between 3 and 5% of the entire project cost. The study made recommendations based on the findings that public firms engaging in capital sensitive PPPs should set up measures that eliminate the risk of failure. The study also recommends that more research to be conducted on PPPs and better guidelines and policies on PPPs to be formulated in order to enhance the performance levels and success rates of PPP projects in the energy sector and beyond. Moreover, the study also recommends that public firms should align their organizational objectives to match the needs of the public they are mandated to serve. The study further recommended that government institutions should provide training to the staff responsible for PPP projects so as to equip them with the necessary skills and capacity to carry out feasibility studies. The study also recommended further studies in PPPs carried out in different sectors of the public in order to make a comparative study of the different sectors.