National Treasury explores PPP models for mega projects after Adani Group exit

 

The National Government is exploring alternative Public Private Partnership models to finance mega infrastructure projects after cancellation of Adani Group-led initiatives for Jomo Kenyatta International Airport (JKIA) and Kenya Electricity Transmission Company (KETRACO).

 Principal Secretary for the State Department of the National Treasury Dr Chris Kiptoo said that the country’s fiscal position is untenable, making it impractical to finance key infrastructure projects like the upgrading and modernization of JKIA through the national budget. 

 Dr Kiptoo who appeared before the National Assembly Public Accounts Committee highlighted the urgent need for JKIA's modernization which will require at least Sh 250 billion pointing out that taxpayers are already burdened by the current tax regime.

 “When JKIA was built and designed it was meant to handle about 5–7 million passengers. today, as the East African hub, it is handling in excess of 10 million passengers it is in dire need of upgrading and modernization to accommodate these numbers and will require at least Sh 250 billion to do this,” Dr. Kiptoo told MPs.

 The PS explained that the amount required for such a significant project cannot be raised through the national budget and that the only viable way to finance this through a public-private partnership (PPP) model explaining after Kenyans rejected the Adani Group the government will need to identify another partner with better ideas and options to execute the project.

 The PS who had appeared before the Butere MP Tindi Mwale led-committee to respond to and address the Auditor General's report for the financial year ending June 30, 2022, concerning the State Department for the National Treasury where he said that the importance of Public Private Partnership in executing crucial projects cannot be over emphasized.

 Funyula MP Wilberforce Oundo pointed out that a majority of Kenyans now favour Public Private Partnership models, citing the successful completion of the Nairobi Expressway, however he argued that projects like the modernization of JKIA presents challenges that might make them unsuitable for PPP models under certain circumstances.

“PPP is the way to go when it comes to financing mega projects, given the limited and constrained fiscal space our country is currently facing, there is need of PPP models to bridge the gap between ambitious infrastructure goals and the reality of strained public resources,” said Oundo.

 Bura MP, Yakub Adow voiced support for PPPs but stressed the critical need for transparency and public engagement in their implementation emphasizing the importance of conducting thorough public participation to educate citizens, ensuring legitimacy and widespread acceptance of such partnerships.

 

“The National Treasury must involve the public adequately to enlighten the masses and secure legitimacy for these projects,If these deals are shrouded in secrecy, as was perceived in the case of the Adani Group's proposals for JKIA and KETRACO, it will be disastrous,”  said Adow.

 

Chepalungu MP Victor Koech also agreed that while PPPs represent a viable path forward for financing large-scale projects in Kenya, the government must adopt a transparent, inclusive approach to avoid public mistrust and opposition and that it should ensure that all agreements align with the interests of the nation and address concerns raised by all stakeholders.

 

“If executed properly PPPs can play a transformative role in advancing Kenya infrastructure agenda without overburdening taxpayers, success hinges on transparency, accountability and meaningful public engagement at every stage of the process,” said Koech.