The controversial takeover of the Jomo Kenyatta International Airport by Indian tycoon Adani is a done deal, according to the Senate.
This emerged when senators disapproved the 30-year proposed takeover of JKIA airport operations by the Adani Group of India.
Despite a spirited defense by Roads and Transport Cabinet Secretary Davis Chirchir that no final agreement had been signed between Kenya and the Indian firm, senators read the small print in documents tabled by the CS and accused him of contradicting himself on the fate of the deal.
The committee also sought to know why the government was sympathetic to a privately initiated process of revamping the airport and building a second runway, which ensured that Adani was the sole developer, as opposed to an open tender system which would attract more investors.
“From your submission, one would conclude that the deal is done because you have said there is a team in India doing due diligence and you are negotiating for a Kenyan Chief Executive Officer... Who then would you be negotiating with if the deal is not done? posed Narok Senator Ledama Olekina.
Busia Senator Okiya Omtatah wondered whether the Adani deal was a case of money laundering, further questioning whether the CS was the rightful person to be fending off questions on the Adani deal before the committee.
“Your document is crafted in a way to suggest the deal is done. It says we shall, we will… this could be a case of money laundering where a public project is being used to repatriate money that has been stolen from Kenya in the guise of developing the airport,” said Omtatah.
Further questioning the use of the Public Private Partnership Act in the Adani case, he added, “I would have expected answers from the CS showing that competitive bidding for this project was ruled out…you are trying to scam us in your response. You have no standing to address this committee and I would ask the chair to demand that the Finance Cabinet Secretary, who is the entity recognized by law come to address the committee under the questions we have asked.”
But in his response, Chirchir submitted that no pen had been put to paper on the airport takeover deal yet.
He also revealed that the Adani group had expressed interest to revamp the airport under a privately initiated proposal which, he said, was allowed for by the PPP Act, 2021.
“No legally binding agreement has been finalized, it is just a draft document…the discussions have only led to the development of a non-binding Head of Terms which has not been signed. The Head of Terms outlines the key terms of the commercial transaction that have been mutually agreed upon in principle,” said the CS.
He explained that the insights gathered through the ongoing engagement with Adani will inform the eventual concession agreement to be signed by both parties and that before any contract is signed, the deal will have to get the nod from several bodies including the Kenya Airports Authority (KAA) board, the PPP committee, National Treasury, legal opinion by the Attorney General and finally the joint memorandum between the Ministry of Roads and Transport, the AG and Treasury before being taken to Cabinet.
“We are at the due diligence phase while also negotiating the proposal submitted by Adani. An initial desktop due diligence was done by KAA and the PPP directorate before commencing the detailed due diligence which will include legal, technical and financial checks,” stated Chirchir.
Adding, “While the Head of terms reflect a serious intent and hold moral authority, they do not legally compel either entity to conclude the deal as proposed.”
Committee Vice Chair Senator Peris Tobiko, however, pressed the CS, seeking to know whether in light of the controversial reports surrounding Adani’s operations in other countries, there would be any financial repercussions should Kenya pull out of the deal at this stage.
“If the process is halted at this point, would you guarantee that no financial losses are incurred by the government of Kenya?” she posed.
To which Chirchir replied, “If we choose not to continue, there will be no financial loss. The deal is, everyone incurs their financial costs until the agreement is signed.”
The CS also defended Adani’s achievements over the years: “I have done my homework on Adani and some of the positive findings is that it runs one of the biggest airports in Mumbai which is a 60 million capacity airport which is the world’s most efficient. It runs another with a capacity of 11 million…”
The committee demanded to know why the government had solely settled on Adani and not any other company.
“We seek to attract capital and build the airport off the government balance sheet. If the government's balance sheet or fiscal space would have been able to support that kind of space we would have to support that kind of investment we would have taken it up,” submitted the CS.
An unrelenting Nairobi Senator Edwin Sifuna however inquired when government policy changed on the upgrade of JKIA, recalling that as of November 2023, there was going to be the initiation of an open international expression of interest for the refurbishing of the airport which was aimed at attracting bids from various investors.
Chirchir responded with, “The capacity for government to become a partner was not possible due to its stretched fiscal capacity... I wish we could get another proposal for developing the airport. If we do get one, we will get them to come develop the airport.”
