Kenya Airports Authority (KAA) employees will have to renegotiate their contracts, with a possibility of job losses to some, should India’s Adani Airport Holdings win its bid to run Jomo Kenyatta International Airport (JKIA) for 30 years.
Adani’s proposed key concession terms to KAA, in which it intends to spend $1.85 billion (Sh246 billion) in upgrading and expanding JKIA, shows the firm would only absorb a portion of KAA's current workforce.
The employees will then be hired on Adani’s terms and conditions. Adani also wants to be allowed to bring non-Kenyans to be part of its workforce. KAA's latest annual report shows it had 1,801 employees by the end of June 2022.
“Concessionaire (Adani) shall offer employment to a mutually agreed percentage of present KAA employees on terms and conditions as recorded in the concession agreement,” reads the proposed terms in part.
“The concessionaire may employ (itself or on a secondment or contract basis) non-Kenyan employees.”
Adani’s proposal may point to potential job losses and a new remuneration structure as it seeks to generate from JKIA $163 million (Sh21.7 billion) in 2025—the proposed first year of operation. The revenue will be more than the Sh13.3 billion that KAA made from all its operations in the financial year that ended June 2022.
The clause on employment contradicts the assurance from the KAA acting Managing Director Henry Ogoye that the proposed deal does not come with any retrenchment risk.
“I wish to assure our staff that no jobs are at risk. I also wish to assure the airport business community and operators that the expanded facility will create additional business opportunities and attendant benefits,” said Mr Ogoye in a statement on Wednesday.
Adani estimates that revenue will jump from $163 million in 2025 (with $47 million or Sh6.2 billion going to the government), to $290 million (Sh38.6 billion) in 2030, giving the government $52 million (Sh6.9 billion).
The firm expects the revenue to jump to $740 million (Sh98.4 billion) in 2045, with the government’s share at $70 million (Sh9.3 billion) and hit $1.2 billion (Sh159.6 billion) in 2054, earning the State $76 million (Sh10 billion).
Adani has already sent to KAA the investment proposal under the public-private partnership model to invest in a new passenger terminal building, build a second runway, and refurbish the existing facilities at JKIA. This will mark the first major facelift for JKIA in 46 years if approved.
The firm wants to run the airport for 30 years and transfer it back to JKIA at a value to be determined by the two parties but guaranteeing it an equity internal rate of return of 18 percent. IRR measures the profitability of an investment.
During the 30 years, Adani will be entitled to set the charges to levy on airlines and other users for its services at JKIA to guarantee 18 percent IRR. All the billings—both aero and non-aero—will be in dollars.
Adani will also be pushing the government to grant it favorable tax policies including exemption from corporate tax for “certain years.”
