Cancel the bad Adani deal before it's too late, MPs tell Mbadi

MPs want the Jomo Kenyatta International Airport lease by India's Adani Holding terminated before it is “too late.”

The legislatures wondered why the government opted to execute the deal through a Public Private Partnership funding model as opposed to subjecting the process to a competitive bidding process.

“I know this is a bad deal for the country. We know that its involvement is an attempt to finance the impugned budget through other deals... "Please let this deal die at the stage it is,” Baringo North MP Joseph Makilap told Treasury Cabinet Secretary John Mbadi.

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The CS, who appeared before the National Assembly Committee on Public Debt and Privatisation yesterday, was hard put to explain the controversial deal.

“From the onset, this deal was not forthcoming and appeared to be shrouded in secrecy…. Section 2 of the PPP Act provides for the cancellation where public interest is impaired. Why can’t you invoke it so we can ensure that other companies willing to bid for the project start from ground zero?,: said Daniel Manduku (Nyaribari Masaba)

Mbadi, however, defended the takeover, explaining that the country stood to gain a lot from it. “It is not within my mandate to terminate the deal; the process is well stipulated.”

He at the same time said that no final agreement has been signed between Adani and the Kenya Airports Authority (KAA), insisting that any investor willing to bid for the same still has a chance.

The House team heard that the process was still at the stakeholder engagement phase and that public participation, which is supposed to be conducted at this stage, was yet to be undertaken due to a court order stopping the entire process.

“The only thing is that the new company identified should compensate Adani the funds they have used at the pre-qualification stage so far,” said Mbadi.

The CS was responding to a query by the committee’s vice chair, Makali Mulu who sought to know whether the window for other companies to apply for the renovation of the Jomo Kenyatta International Airport (JKIA) was still open.

“Where are we with this Adani deal? Can other companies still submit their bids and undertake the project or has that door already been closed?” Mulu posed.

 The committee was also curious as to why the government did not seek a concessional loan instead and manage the renovation of the airport itself.

“The Private Initiated Proposal (PIP) under the PPP is the worst since the country doesn’t have the time to do a feasibility report. Don’t you think this process is expensive and we should borrow the concessional loan to upgrade JKIA?” questioned Kitui MP Irene Kasalu. 

Mbadi responded that financial lenders had become scarce and that there was need to identify other sources of income outside government’s already stretched balance sheet.

 “International finances are shrinking by the day. Even from our traditional lenders…if they give you money they want to be in business. We are spending Sh1.1 trillion yearly on debt servicing and Sh900 billion on salaries and very little if any on development. That is why we are exploring the PPP funding model,” said Mbadi

He added, “We do not have the fiscal space to undertake the development, and if we can get other sources of funding we welcome it. That is why I support PPP with all my life. The only thing we need to do ensure that there is no corruption in it.”

He warned that Kenya risks jeopardising future foreign direct investment opportunities should it hurriedly terminate its deal with Adani Ltd, saying that failure to follow due process in the termination or conclusion of the Adani deal could have ripple effects that could see the country starved of FDI opportunities in future.

“Due diligence is still being conducted on Adani. I have no evidence that Adani is involved in corruption. If they are, I will be the last person to stand and defend them…to what gain?” he posed.

At the same time, MPs have ordered a forensic audit on the deal between KAA and Adani Holdings Limited.

The National Assembly’s Public Investments Committee on Commercial Affairs and Energy has called on the office of the auditor general to probe the origin of the deal and further ordered that KAA halts any further dealings with the Indian based company.

“You should not do anything with Adani until this committee reports this matter to Parliament, you are so advised,” said Committee chair David Pkosing.

The team also wants the Auditor General to verify the billions cited by Adani as needed to refurbish the airport and further establish the cost of building a new terminal and runway.

KAA acting CEO Henry Ogoye who had appeared before the committee was asked to adhere to the committee’s guidelines.“…failure to do so will see you carry personal liability on this matter,” said Pkosing.