More heat than light in Adani JKIA deal

The latest I have come across is a document headlined Head of Terms of The Concession Agreement Relating to Jomo Kenyatta International Airport that I am still reading.

Otherwise, what we are seeing are just claims and counter claims from both sides of the political divide.

One side charges that the concession deal is bad for the country because it was not subjected to international competitive bidding.

The other side counters that under the PPP Act, privately initiated proposals are allowed and perfectly legal.

Read: Proposed Adani, JKIA deal risky and morally unfair to taxpayers

That the reason recent attempts by the government to procure big ticket concession deals such as the Rironi to Mau Summit Road suffered delays was because the open-tendering route had proved infeasible because it has loopholes, which allow disappointed contractors to drag negotiations in protracted litigation.

One side of the divide argues that that financial capacity of the Adani Group to successfully raise the $2 billion required to finance the development of Jomo Kenyatta International Airport was doubtful.

The other side counters that the Adani Group is one of the largest conglomerates in India with interests in sectors ranging from, ports, logistics, energy and airports. This side of the divide is quick to point you to a recent capital raising transaction where Adani Energy’ $ 1 billion Qualified Institutional Placement was oversubscribed six times.

Critics counter that Adani Group has no experience in running airports. The other side says the group was only recently awarded six airport concessions, including Mumbai that handles nearly 25 percent of India’s total domestic passengers.

Critics of the proposal have taken issue with the credibility and reputation of the chief of the company, billionaire businessman, Gautum Adani, pointing out that his financial dealings had come under scrutiny after the US short-seller and research firm, Hindenberg, accused the group of engaging in financial irregularities and stock manipulation.

But the other side of the divide maintain that Hindenberg’s assault on the group must be interpreted in the context of usual tactics of short-sellers always angling to drive the stock of a company down so that it can take a position on the counter. The Adani stock crawled back market capitalisation losses of more than $30 billion after the controversy cooled.

To buttress their argument, the pro Adani side are quick to point you to a similar recent report by Hindenberg on the operations of Kenyan-based but New York Stock Exchange-listed Ormat Geothermal Company that suffered huge market capitalisation losses after Hindenberg alleged that the company- the largest geothermal Independent Power Producer in Kenya- had acquired licences by bribing Kenya government officials. The stocks plummeted and the matter ended up in litigation.

By all means, let’s debate and poke all the holes through the Adani transaction. How much concession fees will they be paying? How closely have we scrutinised the financial proposal. We should not make the same mistakes we made when we allowed Independent power producers to pass through all the costs to electricity consumers.

Read: ​​​​​​​ Beyond JKIA deal scandal-mongering

But at the end of the day, we must accept that- if procured transparently- a new airport concession operated by a reputable international player with deep pockets is going to be a game changer.

We must not forget that we are permanently engaged in cloak-and-dagger games with our East African neighbours over economic dominance of the region.

The Rwandese recently sold 60 percent ownership in the new and modern airport they are building at a place called Bugesera District capable of accommodating eight million passengers.

The deal included sale of 40 percent shareholding stake in the country’s flag carrier- Rwandair.

The Dubai-based air service provider Dnata recently reached a concession agreement with the Government of Zanzibar to run the operations of new built terminals at the Abeid Karume Airport.

Let’s make sure that we do not make the same mistakes we made in 2006 when we handed over our three-meter railway system to that crafty trickster from South Africa by the name Roy Puffet.