Adani will use JKIA title deed to secure loans, petitioners claim

A court case has stoked controversy surrounding Adani Group’s proposed takeover of Jomo Kenyatta International Airport (JKIA), with claims that the company is not investing its own funds but instead using the airport’s assets to secure loans.

The legal battle sheds light on significant concerns regarding transparency, public interests, and the potential ramifications for the Kenyan economy. According to the lawsuit, the Kenyan government will hand over JKIA’s title deed to Adani and is expected to be a guarantor for loans, exposing taxpayers to significant financial risks.

The lawsuit, filed by activist Tony Gachoka and the Mount Kenya Jurists at the High Court, accuses Adani of a scheme that amounts to “sovereign robbery.”

“For all practical purposes, the existing and potential revenue of JKIA is simply being transferred to Adani, which is sovereign robbery,” Gachoka and the Mount Kenya Jurists, through their lawyer Ndegwa Njiru, told Justice Bahati Mwamuye.

.

Keep Reading business

•  Treasury goes for UAE loan as IMF cautions of debt situation Premium
•  Traders claim closure of liquor stores, bars near schools punitive Premium
•  Adani fallout is a lesson on accountability and transparency fight Premium
•  How talent development is shaping Kenya's tech future
•  Street-style snappers reclaim the heart of Nairobi

The group opposes the 30-year lease, arguing that the  process lacked transparency and was conducted without proper public participation. The legal challenges reflect growing unease among various stakeholders regarding the deal’s implications for Kenya’s aviation sector.

The court case comes three weeks after Transport Cabinet Secretary Davis Chirchir tabled documents in Parliament explaining that JKIA generates approximately Sh19 billion annually. The plaintiffs claim the deal hands control of the airport to Adani, allowing the company to profit without making any capital investment.

“For all practical purposes, the Adani Group was not to invest any of its money because the deal would require JKIA to hand over its assets and income to the Adani Group and its Kenyan partners through a company known as Global Airports Operators LLC, incorporated in the United Arab Emirates,” the affidavit says.

The petitioners argue that if the deal goes through, Kenyans will ultimately bear the financial burden. They say that the existing and potential revenues of JKIA are being transferred to Adani, effectively constituting “sovereign robbery.” The plaintiffs express concern that the government’s approach prioritises short-term gains over long-term sustainability in the aviation sector, putting vital national interests at risk.

“The amended petition herein seeks to stop the completion of the sovereign robbery aforementioned. On August 28, 2024, KAA and the Adani Group signed the head of terms of the concession agreement relating to JKIA, setting the stage for the signing of the concession agreement. The petitioners have learnt that the envisaged concession agreement is now ready and can be signed anytime soon. It bears that under the said concession agreement, any resultant dispute would have to be resolved using English law, and specifically, Kenyan courts would not have any jurisdiction. Consequently, public interest and constitutional necessity enjoin this honourable court to grant the conservatory orders sought forthwith,” the affidavit says.

Court documents reveal that Adani’s Project Implementation Proposal (PIP), submitted on March 1, 2024, in collaboration with the Kenya Airports Authority (KAA), lacks a clear outline of the amount the company intends to invest, an omission that violates the Public-Private Partnership (PPP) policy of 2011, which mandates investment as a critical component for any partnership of this scale.

The court was told that despite this deficiency, the proposal has rapidly moved through government approvals, raising questions about the transparency of the process.

“The Adani Group is not an investor seeking to inject capital but an entity positioning itself to profit from public assets,” the petition claims.

The plaintiffs also allege that the concession agreement is structured to benefit Adani and its undisclosed Kenyan partners, who are operating through a UAE-registered company, Global Airports Operators LLC. The petition argues that key government officials from the Treasury and Transport ministries have facilitated this deal without considering the public’s interests.

“This proposal has been processed and approved by the government in over 10 significant steps as a national emergency. Ordinarily, those ten steps should take a minimum of 15 months under the law,” says the affidavit.

One of the most contentious aspects of the case is the revelation that the concession agreement would be governed by English law, effectively excluding Kenyan courts from handling disputes. This arrangement raises significant concerns regarding the loss of national sovereignty and the potential for foreign entities to operate above local jurisdiction. The petitioners argue that this arrangement erodes Kenya’s sovereignty and call for the courts to issue urgent conservatory orders to halt the signing of the concession agreement.

“The proposed deal excludes Kenyan courts from any potential disputes, further diminishing the country’s role in a matter of national importance,” said Njiru in court. He emphasised the need for immediate intervention to protect the public interest, underscoring the gravity of the situation for ordinary Kenyans who could bear the financial burden of a deal that primarily benefits foreign interests.

The case sheds light on broader concerns about how the JKIA concession process has been handled.

“In 2023, the KAA had publicly announced that it was reviewing six different Project Implementation Proposals (PIPs) for JKIA and other airports, including Wilson and Isiolo airports. However, the petitioners allege that high-level officials conspired to ensure Adani’s proposal received favourable treatment, sidelining other potential investors,” the affidavit reads.

The plaintiffs argue that this raises questions about the integrity of the procurement process, particularly in light of the lack of transparency surrounding the government’s decisions.

Critics argue that Adani’s proposal focuses on terminal and city-side developments rather than addressing critical infrastructure needs, such as a second runway. Despite a consultant’s recommendation for a more comprehensive airport development strategy, the government opted for the terminal-focused PIP.