Treasury Principal Secretary Chris Kiptoo now says the government will seek a new investor to expand the Jomo Kenyatta International Airport (JKIA) following the cancellation of the controversial Adani deal.
Dr Kiptoo told the National Assembly’s Public Accounts Committee (PAC) that the JKIA expansion and modernisation will have to be undertaken through the Public Private Partnership (PPP) arrangement.
He told lawmakers that JKIA expansion requires $2 billion (Sh260 billion) which cannot be funded through the national budget.
“I have to be honest here. We have a very tight fiscal space at the moment. JKIA requires $2 billion and the expansion plan has lagged by more than 10 years,” Dr Kiptoo said.
“This is a strategic hub and it is important that we modernise it but we have no money in the budget. We will have to do another PPP for JKIA competitively. We need to ask ourselves that apart from Adani, who else can do this JKIA expansion?”
Dr Kiptoo said the new PPP will be undertaken competitively.
He said when the JKIA was designed in 1978, it was meant to handle seven million passengers but currently handles nine million passengers and cargo.
President William Ruto on November 21, 2024, ordered the Ministry of Transport to cancel the proposed JKIA deal with Indian conglomerate Adani Group.
The government has been considering the Privately Initiated Proposal (PIP) by the Adani Group, founded by Indian billionaire Gautam Adani, to lease the country's main airport for 30 years in exchange for expanding it.
The PPP project sparked public outrage, with the Law Society of Kenya (LSK) and the Kenya Human Rights Commission challenging the deal in court, saying it was unaffordable, threatens job losses and does not offer value for money.
President Ruto also directed the Energy Ministry to cancel the Sh95.6 billion deal between State utility Ketraco and Adani Energy Solutions to build and operate power infrastructure, including transmission lines.
The President gave the orders when he delivered his second State of the Nation Address in Parliament last Thursday to defend his administration’s economic record.
“I have stated in the past, and I reiterate today, that in the face of undisputed evidence or credible information on corruption, I will not hesitate to take decisive action,” President Ruto told Parliament.
Dr Kiptoo told PAC that major projects such as the JKIA expansion require substantial resources that can only be undertaken through the PPP model.
He told the committee session chairman and Funyula MP Ojiambo Oundo that the Treasury is restructuring the PPP department to build its capacity to handle complex projects.
“We have also trained Ministries, Departments and Agencies (MDAs) and County governments on how to be involved in PPPs structuring,” Dr Kiptoo said while responding to audit queries raised by the Auditor General on the National Treasury’s books of accounts for the year to June 2022.
“The processes on how to structure PPP projects have been greatly improved. We want to cut bureaucracy, ensure transparency and accountability, and conduct detailed feasibility and due diligence before we can enter into any PPP.”
Dr Oundo said the mention of the word PPP raises eyebrows as Kenyans are now scared of scandals such as the Adani JKIA and Ketraco debacles.
“We appreciate PPP let the Treasury or any other government entity do the PPPs transparently and as per the laid down laws. We want Kenyans to be involved in the process to create ownership of the projects,” said Dr Oundo.
Bura MP Yakub Adow said the committee is not rejecting the JKIA expansion through the PPP model, but the Treasury must ensure competitive bidding for PPPs accompanied by detailed feasibility studies and due diligence.
“We want Kenyans to be involved when PPPs are being developed to avert a backlash and unpopular projects,” Mr Adow said.
In the PPP agreement with Ketraco, the Adani firm proposed to build a new 206-kilometre Thika-Malaa—Konza line, a 95-kilometre Rongai-Keringet-Chemosit link, and approximately 98 kilometres for the Menengai-Ol-Kalou-Rumuruti conduit. It was also to build two substations—the 132kV Thurdiburo substation and the 400/220/132kV substation at Rongai.
The JKIA and Ketraco PPP projects were frozen by the High Court pending the determination of the cases.
The deals were canceled after Gautam Adani, the billionaire chair of Indian conglomerate Adani Group and one of the world's richest people, was indicted in New York for his role in an alleged multibillion-dollar bribery and fraud scheme.
US prosecutors said Adani and seven other defendants, including his nephew Sagar Adani, agreed to pay about $265 million in bribes to Indian government officials to obtain contracts expected to yield $2 billion of profit over 20 years and develop India's largest solar power plant project.
