India’s Adani Energy Solutions and Africa50 are set to construct power transmission lines and substations under a Public Private Partnership (PPP) deal valued at a combined $1.22billion (Sh158.24 billion), the National Treasury has revealed.
The Treasury disclosed that it had approved the deals with the two firms and is currently negotiating terms of the projects meant to help bolster the country’s shaky and aging electricity transmission network.
Both projects by Adani Energy Solutions—a subsidiary of Adani Group and Africa50 will be implemented under the Kenya Electricity Transmission Company.
Adani Energy Solutions will build the 206-kilometre (km) 400 kilovolts (kV) Gilgil-Thika-Malaa-Konza power transmission line, as well as the 95km 220kV Rongai-Keringet-Chemosit and the 70km 132kV Menengai-Olkalou-Rumuruti lines.
The India firm will also construct a 400/220kV substation at Lessos and similar facilities in Rongai, Nakuru, and Thurdibuoro in Kisumu each with a capacity of 132/33kV.
The Treasury in its draft Budget Policy Statement (BPS) revealed the Adani projects will cost $907million (Sh117.62 billion).
“The project development or feasibility study report was completed, submitted, and approved in May 2024, for the project to progress to contract negotiations,” the Treasury said about the Adani project.
Africa50—owned by the African Development Bank and African governments— will build the 400kV transmission line from Loosuk to Lessos spanning 177km and the 64km Kisumu-Musaga 220kV transmission line.
The Africa50 project package includes associated infrastructure such as substations, a new 400kV switch station at Loosuk, new 220/33kV substations at Kakamega, and substation extensions at Lessos, Musaga, and Kibos.
The Treasury in its BPS 2024 indicated that the Africa50 projects would cost $313.25million (Sh40.62billion)
“The negotiations with the private party are underway, and the proposed terms shall be tabled to the PPP committee for approval” the Treasury said about the Africa50 project pitch.
Kenya has turned to the PPP model to deliver power projects to bridge an infrastructure gap that has been blamed for frequent power outages, without burdening the Exchequer or taking loans.
Adani Energy Solutions is India’s largest private transmission company and subsidiary of the Adani Group, which is owned by Gautam Adani, the country’s second wealthiest person.
The lines and substations are critical in easing pressure on the transmission line, especially in the western region, and significantly cut power outages that hit the country when the overstretched lines trip whenever there is a surge.
For example, Kenya Power has been rationing power in parts of Western Kenya amid the load capacity hitches. The planned outages are meant to ensure that the entire country is not plunged into blackouts.
Besides an aging transmission network, the rise in new connections has not been evenly matched with an upgrade of the system, exposing it to strain mainly in the Western region.
The lack of funds to expand the transmission network has left Kenya in an unfamiliar territory of being forced to ration power despite excess generation.
The duration of blackouts has in recent years been on the rise underscoring the need to diversify funding models to fund upgrading and extension of the network.
The government shifted to the PPP model to deliver power projects in line with a resolution by Parliament last year.
Lawmakers directed the Treasury to use the PPP model to build high-voltage power lines without burdening the Exchequer, which is faced with a limited debt headroom to fund capital-intensive projects.
Ballooning debt payment obligations especially to China have also significantly cut part of the revenue collections that can be used to fund high-value development projects.
For example, in the year that ended in June, Kenya spent 73.8 percent of the Sh2.22 trillion raised in ordinary revenue to pay the debt, highlighting the dire fiscal state.
Early this year, the National Treasury disclosed a pipeline of 31 projects at various stages of the PPP project cycle. The projects are spread in the energy, transport, and water sectors.
