By THEDISPATCH.DIGITAL REPORTER – NAIROBI
The Jomo Kenyatta International Airport has not entered into any agreement with an external partner to develop or manage it, the Kenya Airport Authority now says. The KAA’s Acting Managing Director Henry Ogoye says the KAA had received an investment proposal from the Adani Airport Holding of India under the Private Public Partnership act of 2021to invest in anew passenger terminal building, second runway and refurbishment of existing facilities at JKIA.
The authority however, says the proposal has not yet been subjected to technical financial and legal reviews and has therefore not bene approved for action. It says the project will be preceded by stakeholder engagement, the National treasury approval, Attorney general’s clearance and Cabinet approval.
The statement was in direct contradiction to the reality, that the Adani group had come to Kenya to sign off the deal and was ready to take over the airport in accordance with an agreement reached under former CS Kipcumba Murkomen. It was also claimed that the deal had been revoked because Murkomen had factored in his personal interests and list had to be renegotiated as he was no longer ion the scene and the new CSs’s interests had to be factored in any new agreement.
Intriguingly, according to a report in The Times of India, a respected India daily, all airports run by the Adani group in India are making losses. According to the Ministry of Civil Aviation of India, all seven airports run by the Adani Group made losses in the last year. Of all the airport operated on a PPP model in India, only Bengaluru, Hyderabad and Kochi were profitable in 2023, bringing into doubt the justification of turning JKIA over to private hands.
But while the government denies the existence of any deal the Adani Group released information saying that the project was in its final contract negotiation stage, involving details financing and concession agreements. In the agreement that was allegedly agreed with the Adani Group, the company would enter into a 30-year lease of the airport and the Kenya Government would get a fixed concessional fee and financial adjustments for inflation over the 30-yea period. Adani was to get an 18% Internal Rate of Return (IRR) and the capital expenditure would be refunded at the end of the period so Kenya would not have to pay upfront costs.
Critics of the Adani deal pointed out that if the project IRR is 18% , apex should not be paid back at the end of the tenure and as in six years, Adani would have recouped its investment and have 24 years to profit making.