Source: The Kenyan Wallstreet
Adani Airport Holdings Limited (AAHL), an Indian based company, has proposed to invest US$ 1.84 billion to expand and run the Jomo Kenyatta International Airport (JKIA), the Kenya Airport Authority confirmed last week after the proposal leaked and triggered widespread controversy.
- The proposal, a copy of which The Kenyan Wall Street has seen, is under a concession agreement seeking an expected 18 percent annual return on investment if the deal is accepted.
- The government would grant concession to Adani to finance, build and operate the project for 30 years, and then give the company an equity stake in perpetuity.
- Adani proposes a US$ 750 million investment in developing a new terminal building, associated apron, taxiway system and two rapid exit taxiways seeking to improve efficiency.
It will also use US$ 92 million to improve the taxiway network system, establish two more rapid exits, 90-degree taxiway connections at both ends of the runway, remote aircraft parking stands and other associated facilities, by 2035. An extra $620 million will be used in developing new facilities to ensure a seamless integration with existing infrastructure.
According to sources, in February 2024, ALG, a Spanish consulting firm, conducted a feasibility study on the project and consequently advised the state to put out a public tender to expand JKIA. However, Adani Airport Holdings, a subsidiary of Indian conglomerate Adani Group, was allowed through a privately initiated proposal.
“Procuring the proposed project using a competitive bidding method may impede achieving the desired outcomes within the set timelines due to the extended procurement process, coupled with contractual and delayed project commencement timelines associated with competitive bidding.” Adani said in the proposal dated March 2024.
The investor does not intend to invest in a second runway at the airport, instead pushing the decision to a later date. “[A]2nd staggered runway on southern side of the airport will be considered after utilizing the current runway efficiently,” the company said.
In the proposal, Adani seeks to be allowed to employ non-Kenyans and the hiring to be under its terms and conditions.
“Concessionaire may employ (itself or on a secondment or contract basis) non-Kenyan employees,” the company says. While this is typical of PPP deals, it is likely to trigger controversy as it contradicts the July 24th statement by KAA Managing Director, Henry Ogoye, where he assured the staff of job security.
Why it Matters
The leaking of the proposal immediately raised public fears that it had already been secretly signed, which led to planned protests within the regional hub. Although the protests did not happen as expected, popping up instead in the Nairobi Central Business District (CBD), the leak helped fuel ongoing public discussions about government deals and accountability.
According to the Kenya Airports Authority, the proposal is still in its initial phases, and will be scrutinised before it is subjected to stakeholder engagement and further scrutiny by both Parliament and the Attorney General. “The attendant investment requirement is significant and cannot be funded with the prevailing fiscal constraints without recourse to private funding,” Henry Ogoye, the Acting Managing Director/CEO of KAA said in a statement.
Public scrutiny has also focused on Adani Airport Holdings, a subsidiary of Adani Group, a conglomerate founded by Gautam Adani in Ahmedabad in 1988. It now consists of 16 companies, out of which 9 are listed, with investments spread across ports, food, real estate, infrastructure, sports, mining and energy. In 2023, Hindenburg, a New York based short seller research company, released a report detailing organized stock manipulation and accounting fraud from Adani group firms.
THE AUTHOR: Zainab Hafsah
