The cancellation of Adani Energy Solutions Ltd’s (AESL) power transmission lines project left a Sh32.3 billion hole in the Treasury’s projections for public–private partnership (PPP) fund inflows, undermining government plans to finance infrastructure without adding to public debt.
Data from the Treasury shows that PPP fund mobilisation in the 2024/25 financial year amounted to Sh17.7 billion, falling short of the Sh50 billion target set at the start of the year.
The shortfall of Sh32.3 billion has been attributed to termination of Adani's AESL project, which had been expected to anchor PPP inflows for the year to June 2025.
“The target [for 2024/25] not achieved. Shortfall was as a result of termination of Adani Energy Solutions Limited (AESL) power transmission lines project,” the PPP directorate at the Treasury wrote in budget proposal documents.
President William Ruto ordered cancellation of the project on November 21, 2024, following the indictment of Adani Group founder Gautam Adani in the United States over allegations that he paid about $265 million (Sh34.45 billion) in bribes to Indian government officials. Adani denied the allegations.
The decision halted AESL’s high-voltage electricity transmission projects in Kenya, whose total cost was estimated at $907 million (about Sh117.91 billion) upon completion.
The projects included the construction of a 197-kilometre 400-kilovolt (KV) transmission line along the Gilgil–Thika–Mala–Konza corridor, a 101-kilometre 220KV line between Rongai, Keringut and Chemosit, and a 90-kilometre 132KV line linking Menengai, Ol Kalou and Rumuruti.
Other components affected by the cancellation included 400 kilometres of 220KV substations at Lessos and Rongai and a 132KV/33KV Thurdibuoro substation.
The construction of the power lines are key to strengthening Kenya’s electricity transmission network and evacuating power from generation sources.
The termination of the AESL deal highlighted the risks in Treasury’s PPP funding strategy, which has over the years relied on a few mega-projects to meet annual financing targets as fiscal space tightens and public debt-servicing costs rise.
While PPPs are intended to reduce pressure on the exchequer by leveraging private capital, Treasury data shows inflows have become erratic in recent years.
After exceeding targets in 2021/22 when PPPs mobilised Sh80.6 billion, inflows weakened to Sh45.7 billion in 2022/23 before collapsing to just Sh4.3 billion in 2023/24. The rebound in 2024/25 was not sufficient to meet the Sh50 billion target.
During the last financial year to June 2025, PPP inflows were supported by two projects, the Treasury documents show. The Galana–Kulalu Food Security Project contributed Sh6 billion, an additional amount on top of the previously reported Sh6.5 billion, while the Orpower 22 Menengai Geothermal Power Plant Project accounted for the remainder Sh11.7 billion.
The Treasury expects to mobilise Sh65 billion in PPP funding this fiscal year ending June 2026, which will surpass the annual target of Sh50 billion.
Key projects expected to drive inflows of private capital include the recently-commissioned Rironi–Nakuru–Mau Summit Road Project, estimated at Sh150 billion, the Africa50 transmission lines project valued at Sh41 billion, and the National Transport and Safety Authority’s new generation driving licence and traffic monitoring system whose total cost is projected at Sh45 billion on completion.
The Treasury report, however, indicates that the gap between project approval and implementation has been widening.
For example, while 36 PPP projects were approved in 2024/25, only eight are currently being implemented. The remaining 28 projects are at various stages of the PPP project cycle, including feasibility studies, procurement and financial close.
In its draft 2026 Budget Policy Statement, the Treasury acknowledged the execution challenges and said it was strengthening the legal and regulatory framework governing PPPs.
It cited the PPP Act, 2021, ongoing reviews of the PPP Regulations, 2014 and the Project Facilitation Fund Regulations, 2017, and new disclosure rules for Privately Initiated Proposals (PIPs) to address information asymmetry.
“Contracting Authorities are required to publish all intended and ongoing projects in line with section 43 and 69 of the PPP Act of 2021,” the Treasury wrote in the draft 2026 BPS document.
