Inside Adani’s Ksh.95 Billion, 30-Year Deal for Kenya’s Power Lines.
Last week, a monumental step towards enhancing Kenya’s power infrastructure was taken as the government finalized a Ksh.95 billion ($736 million) agreement with Adani Energy Solutions, a subsidiary of the Adani Group. This landmark deal will significantly bolster the nation’s energy supply and reshape the landscape of public-private partnerships in the region.
Following four months of negotiations, Adani Energy Solutions will develop and maintain key transmission lines and substations across the country. Under the terms of the agreement, Adani will manage the constructed transmission lines and substations for 30 years before handing over the project and all associated assets to the Kenya Electricity Transmission Company Limited (KETRACO) “in good condition and free of any encumbrances.”
It has been established that the Indian company will pay the government a Ksh.1 billion ($8 million) success fee, which is a compensation typically awarded for successfully closing a deal.
Details of the Public-Private Partnership (PPP) agreement shared by KETRACO reveal that Adani Energy Solutions agreed to pay the Kenyan government a success fee of one percent of the total project cost.
Project Overview
In this build-own-operate-transfer arrangement, Adani plans to develop the 400-kilovolt Gilgil through Thika and Malaa to Konza transmission line, stretching 208.73 kilometers and featuring new substations in Gilgil, Thika, and Malaa.
Additionally, a second 220-kilovolt line will be constructed from Rongai to Keringet and Chemosit, covering 99.98 kilometers with new substations at Rongai, Keringet, and Chemosit. A third 132-kilovolt transmission line will extend 89.89 kilometers from Menengai through Ol Kalou to Rumuruti, accompanied by a new substation.
Moreover, Adani plans to establish a 132/33-kilovolt substation at Thurdibuoro in Kisumu County. According to KETRACO, these projects are expected to be completed within 24 months from the date of the agreement. Failure to meet this timeline could result in KETRACO enforcing performance security measures or terminating the agreement.
The funding for the project will be sourced from debt and equity at a 70:30 ratio, with Energy Cabinet Secretary Opiyo Wandayi confirming that the Kenyan government will incur no financial costs related to this initiative. Furthermore, Adani is obligated to maintain a competitive bidding process to ensure business opportunities for Kenyans.
KETRACO will appoint an independent expert to monitor and manage the project’s implementation, working alongside a dedicated project implementation team.
Compensation and Impact
As part of the agreement, the project aims to address Kenya’s recent power blackouts, attributed to aging transmission lines. KETRACO has assured that all individuals affected by the project will receive compensation for any loss of assets, including damage to crops and trees. Those impacted will also be compensated at market value for any limited loss of land use due to the transmission lines, ensuring that all persons displaced by the project are fully resettled.
Despite concerns over how public participation was conducted, following Adani Energy Solutions’ submission of a privately initiated proposal, the government maintains that comprehensive due diligence was conducted.
In addition to this power project, Adani Energy Solutions’ sister company, Adani Airport Holdings, is engaged in a controversial $1.85 billion (approximately Ksh.239 billion) investment deal with the Kenyan government aimed at expanding Jomo Kenyatta International Airport (JKIA) in Nairobi. However, the court has halted all further action on the proposed lease of JKIA to Adani until a case lodged by the Kenya Human Rights Commission (KHRC) and the Law Society of Kenya (LSK) on September 9 is resolved.
Currently, Adani Energy Solutions is also negotiating another $900 million (approximately Ksh.116 billion) deal to upgrade Tanzania’s electricity transmission line. A top government official familiar with the matter recently revealed to Bloomberg that the Indian firm seeks to construct high-voltage power lines through a similar public-private partnership deal with Kenya’s southern neighbor.
As Adani Energy Solutions embarks on this ambitious project, all eyes will be on the company’s execution and the broader implications for Kenya’s energy landscape and economic growth.
Article By Suzy Nyongesa.
