The Kenya Airports Authority (KAA) has locked out Kenya Re from using its land next to the country’s main airport, effectively stopping the Nairobi Securities Exchange-listed firm from realising value from the asset worth Sh720 million.
The land adjacent to the Jomo Kenyatta International Airport (JKIA) is among several investment properties which the reinsurer is unable to use owing to a mix of legal disputes and government regulations.
“The company is the registered owner of Land LR No. 9042/222 within the precinct of Jomo Kenyatta International Airport (JKIA) valued at Sh720 million as at December 31, 2021,” Kenya Re says in its latest annual report.
“However, management has disclosed that it has restricted access to the land as imposed by Kenya Airport Authority (KAA) mainly due to security reasons. Therefore, they are not realising the full potential of their investment.”
Use of land adjacent to airports is normally restricted to activities that do not pose a threat to the landing and takeoff of aircraft. Such threats include terrorist attacks.
Building of residential and commercial properties near airports is also discouraged to minimise fatalities in case an aircraft crashes. The JKIA land is among several land holdings whose utilisation or sale has been made difficult due to legal battles and government mandates.
Kenya Re is the owner of 99.5 hectares along Kiambu Road worth Sh563 million but the insurer is in dispute with a director of the firm from which it acquired the property.
“The corporation is therefore not realising the full value for money of the funds invested in the property,” the Auditor-General said in the reinsurer’s report.
Kenya Re bought 59.8 hectares along Ngong Road at a cost of Sh350 million. The land is also being claimed by Kenya Forest Service. The matter awaits the National Land Commission's decision.
“The corporation may not be realising the benefits that may accrue from ownership of the land and the management is not in a position to make long term investment plans unless the matter is resolved,” the Auditor-General said.
Kenya Re owns 17.3 hectares in Mombasa worth Sh23 million. The Kenya Prison Service is also claiming the land, an outcome that has left the asset unused.
Kenya Re’s net profit grew marginally in the year ended December to Sh2.97 billion after taking a Sh909.4 million bad debt impairment.
