President William Ruto took the bold decision to order the cancellation of two multibillion-shilling deals involving the controversial Adani Group, even as focus shifted to the cost of revoking one of the contracts that had already been sealed.
Adani Energy Solutions had in October signed a Sh96 billion deal with Kenya Electricity Transmission Company (Ketraco) to build and operate four transmission lines and two substations for 30 years.
Sources at the Treasury reckon that Kenya would pay a small share of the Sh96 billion, which is contained in the project agreement to cater for loss of earnings and the cost of putting the project together ahead of approval.
Adani could also push for higher compensation given there are no extraordinary grounds and the emergence of new information in the Kenya project to trigger termination, said the Treasury source.
Besides the power deal, President Ruto also cancelled the procurement process that had been expected to award control of Jomo Kenyatta International Airport (JKIA) to Adani Group after its founder was indicted in the United States.
US authorities said in the indictment on Wednesday that group founder Gautam Adani, one of the world's richest people, and seven other defendants agreed to pay about $265 million in bribes to Indian government officials.
The Adani Group denied the allegations and said in a statement that it would seek "all possible legal recourse".
"I have directed agencies within the Ministry of transport and within the Ministry of Energy and Petroleum to immediately cancel the ongoing procurement," Dr Ruto said in his State of the Nation Address, attributing the decision to "new information provided by investigative agencies and partner nations".
The Adani deals have drawn sharp criticism from many politicians and members of the public over concerns about a lack of transparency and value for money.
News of the charges wiped billions of dollars on Thursday from the market value of companies within Adani Group, and Adani Green Energy, the company at the centre of the allegations, cancelled a $600 million US bond sale.
The crisis is the second in two years to hit the ports-to-power conglomerate founded by Adani, 62, one of the world's richest people.
In January 2023, short-seller Hindenburg Research issued a report that accused it of using offshore tax havens improperly, which Adani Group denied. The Adani Group companies as a whole lost about $27 billion (Sh3.48 trillion) in value in Thursday's trade in India, putting their combined market capitalisation at about $142 billion (Sh18.3 trillion).
This fall is compared to the share performance after the Hindenburg news report on the Adani Group. Shares in Adani Green Energy plunged 19 percent and stocks for many other firms in the conglomerate, including flagship Adani Enterprises, lost more than 10 percent.
Before Hindenburg's report sparked an approximately $150 billion (Sh19.3 trillion) meltdown, the group's market value was $235 billion (Sh30.3 trillion).
Adani dollar bonds also slumped.
In Kenya, Treasury Cabinet Secretary John Mbadi Thursday said no money will be lost for cancellation of the JKIA deal but he was non-committal on the Ketraco contract.
“The Ketraco deal has progressed and will check if there is any possibility of exposure. However, for JKIA, there is no money lost. It was still at the initial stages as I had told MPs,” said Mr Mbadi.
Together with Adani Energy Solutions, a unit of the African Development Bank (AfDB) -- Africa50—also got deals to build new transmission lines. In January this year, disclosures by the Roads and Transport ministry revealed that Israeli road construction firm SBI International Holdings Kenya was paid Sh6.19 billion for breaches involving nine contracts awarded under President Uhuru Kenyatta’s regime.
Earlier in December last year, Treasury had disclosed that the government would pay an additional Sh4.7 billion to tow Chinese contractors as part of an out-of-court settlement for the cancellation of a tender to build the second terminal at the Jomo Kenyatta International Airport (JKIA) nine years ago, pushing the total payment to Sh8.9 billion.
In April this year, a Cabinet dispatch indicated that Italian construction company CMC di Ravenna had withdrawn a case in which it had filed at the International Court of Arbitration at The Hague in which it sought Sh12 billion for the termination of contracts to build Itare, Kimwarer and Arror dams.
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