The Adani-JKIA Deal: Navigating Kenya’s Ambitious Aviation Overhaul.

Kenya’s largest airport, Jomo Kenyatta International Airport (JKIA), has been at the center of a heated controversy over what is alleged to be an improper deal involving the Indian conglomerate Adani Enterprises. The dispute intensified on Thursday when airport staff went on strike, exposing deeper political and financial intrigues.

Background

The political intrigues around JKIA date back to December 2013, when President Uhuru Kenyatta and then-Deputy President William Ruto oversaw the groundbreaking of the Greenfield Terminal project. This Ksh.56 billion investment aimed to enhance JKIA’s passenger capacity to 20 million annually and build a second runway, deemed necessary by 2035. However, the project was mysteriously canceled in March 2016 due to political disagreements and internal conflicts.

When William Ruto became President in 2022, discussions about reviving stalled mega projects, including the Greenfield Terminal, resurfaced. The project was pursued under a public-private partnership (PPP) model, citing a lack of government funds.

The Adani Proposal

In March 2024, Adani Airports Holding Limited submitted a proposal to the Kenya Airports Authority (KAA) to develop and expand JKIA through a Build, Operate, and Transfer (BOT) model. Adani’s proposal suggested operating, maintaining, and managing the airport for 30 years, including upgrades and expansions. The plan also proposed taking over nearly all functions currently performed by KAA.

However, the KAA found the proposal untenable, noting that Adani’s plan did not align with the KAA’s master plan. Despite this, the Adani deal advanced, leading to the registration of Global Airports Operator L.L.C in Abu Dhabi and Airports Infrastructure PLC in Kenya, both linked to the Adani Group.

Political and Financial Implications

The deal has raised concerns due to its secrecy and terms. Adani’s proposal includes a demand for government protection from competition and high fees for users. The financial terms, such as an 18% return on debt and a 21% return on equity, are considered excessive compared to industry standards.

ALG, a global consulting firm, recommended an open tender process for the project, citing best practices. However, Adani opposed this, arguing for a faster, less competitive procurement method. Additionally, the draft contract includes provisions that could lead to significant financial burdens for Kenya if new airports are built within a 100-kilometer radius.

Future Prospects

The Adani deal has been surrounded by high-level influence and pressure, with reports of senior government advisors accelerating due diligence and the deal being discussed during foreign tours. The involvement of influential businessmen and significant financial interests underscores the complexity of the situation.

As Transport CS Davis Chirchir assured that the deal would be scrutinized by Parliament, the future of JKIA remains uncertain. The controversy highlights broader concerns about transparency and governance in Kenya’s major infrastructure projects.

Article By Suzy Nyongesa.