The takeover of East Africa’s busiest hub, Jomo Kenyatta International Airport is poised to take effect in November.
There’s information of meetings and secrets that point to the takeover of the airport by Indian-based Adani Group Holdings after six months behind-the-scenes planning.
It is also emerging that should the deal between the government and Adani fall through at any given time, the parties will go for arbitration in London.
Details emerging from a public participation meeting held by the Kenya Airports Authority (KAA) indicate that both KAA and Adani have been working on a six-month timeline to plan the takeover by November.
Addressing stakeholders at a Nairobi hotel on Friday, KAA’s Acting Managing Director Henry Ogoye, defended the concession, explaining that KAA will help Adani manage the airport for the first two years. Thereafter Adani will fully take over JKIA for 30 years.
Ogoye said that all leases would be transferred to Adani after two years of taking over.
Additionally, KAA will be answerable to Parliament on behalf of Adani, as they aim to maximise returns at JKIA.
“Adani will not be summoned by Parliament, but we will be,” Ogoye concluded.
He added, “I have handled Adani for six months; let us not get emotional. Even if Adani might be here for 30 years, someone else might take over,” Ogoye told stakeholders at the meeting.
The session, which began at 9 am and was abruptly adjourned at 1 pm as KAA informed participants that their booked time had expired.
KAA explained that it is in the process of upgrading and expanding JKIA-associated infrastructure to meet demand growth and improve service standards and decarbonisation requirements through a concession framework with Adani Airport Holdings of India.
The stakeholders’ meeting centred around Adani’s Privately Initiated Proposal (PIP), which was submitted to KAA and outlined several controversial terms regarding the management of JKIA.
The proposal highlights JKIA’s average operating profit of $47.5 million (Sh6.08 billion) over the past five years and a net profit of $33.8 million (Sh 4.33 billion) for FY23. Adani suggests funding improvements through a combination of debt, equity, and other methods
During the public participation meeting, which Adani did not attend, Ogoye added that the government avoided a competitive process to save time after stakeholders raised concerns about transparency, accountability, and equity, describing the process as suspicious from its inception.
Ogoye mentioned that a team is already in India to review Adani’s financial records and the airports they are managing as part of the due diligence ahead of the expected takeover.
“We are discussing Adani because it’s the only option on the table,” Ogoye told stakeholders, adding, “We agreed that within six months, the project should start, or Adani will pull out.”
When asked if KAA would consider setting up another airport, the Ogoye responded, “We have a facility to service, and Adani will have timelines.”
However, Ogoye explained, “Take, for example, the car park; it was under concession and will run until 2032. The concession fee is just to ensure the continuation of other operations.”
The MD said that all other facilities are incurring losses and that he was not aware of any scandals associated with Adani.
The group was also told that the government had not approved the documents that would be given to the public.
They were also told that a new agreement between KAA and Adani is expected soon and will be handed to the Attorney General, and then the Cabinet before Adani signs.
“I already have bids from the UN and Exim bank to set up a logistic and quality centre here. I can assure you JKIA will remain competitive,” Said Ogoye, who added, “I cannot allow what is happening at Wilson to happen at JKIA.’
According to the MD Wilson resembles was not competitive and appeared disorganised.
“There were other companies from South Korea, North Africa, and Abu Dhabi. We now have Adani and need to make it work,” Ogoye told stakeholders.
In his submission, John Alienya from the Shippers Council of Kenya said that the engagement with Adani was not clear and wanted the government should explain why it is hiding documents.
“We came to this meeting to discuss the documents that we have been not given. We are worried because our members have invested billions in airports and we don’t know who we will be dealing with,” Alienya said.
John Mutinda, asked KAA to restart the process afresh so that Kenya can have value for their money.
“You cannot refurbish an old building to be a new building. The slab and other features cannot be changed,” Mutinda said, adding, “We need a new airport to get the value of our taxes.”
He said that it was sad that the Adani deal was made public by a whistleblower and that the project was being forced on Kenyans.
“Adani is in business and it will squeeze us businesses at the airport properly,” he added. He urged the government to learn from the Kenya Railways experience before considering the Adani deal.
“Adani is coming and starting to refurbish. For all travellers in the world, you cannot refurbish an airport, and you can look at other airports,” Mutinda said, adding, “Why do we have someone coming to refurbish an airport, which Kenyans can do?”xxx
He called on the MD to invest in a new facility and runway as the current one continues to serve millions of people travelling through JKIA.
“It is very bad that we were called here for a public participation initiative to rubber stamp a flawed process by those in government to take over JKIA,” Moses Musyoka of Air-Go Consultants Limited said, adding, “We have read reports from other countries discussing money laundering, poor labor practices, and substandard services. It appears no due diligence was conducted.”
According to Andani PIP proposal to KAA on JKIA, significant aspect of the proposal involves transferring debt to the government, potentially placing a financial burden on taxpayers.
Adani opposes a competitive bidding process for a Public-Private Partnership (PPP), arguing that it would cause delays and is seeking immediate government support and financial guarantees.
Under the proposal, if Adani takes over JKIA, the government would be restricted from constructing a competing airport for 30 years. The plan also calls for changes to Kenyan laws to grant Adani exclusive operating rights at JKIA.
It prohibits upgrades to Kenya’s 38 airports and the construction of new ones without Adani’s consent, effectively blocking improvements at key airports like Isiolo, Mombasa, Kisumu, and Eldoret.
The government would also be responsible for covering losses, including those from terminating the JKIA deal, and would need to resolve legal disputes over JKIA land while setting up a fund for termination damages.
The proposal seeks to reduce the government’s role in air traffic management and security while granting Adani control over fee collection, tax exemptions, and land access. Adani claims that no additional runway is needed until the concession ends in 2054. The company would manage some KAA staff, potentially leading to layoffs and the hiring of foreign workers. The government would need to borrow funds for airport improvements, with Adani financing through debt.
Adani’s plan includes managing service fees in USD, repatriating earnings, and determining payments to Kenya, including termination fees. The proposal suggests doubling airport charges to align with regional hubs like Addis Ababa, thereby increasing revenue to secure JKIA’s future. The plan has faced criticism for bypassing standard procedures to involve a private operator. Adani proposes a Sh246 billion ($1.85 billion) investment in three phases, starting with Sh97.5 billion ($750 million) for a new terminal by 2029.
The company argues that raising fees would yield an 18% return on investment, claiming that a 100% increase would minimally impact ticket prices while keeping JKIA competitive. The proposal includes a concession fee to KAA, starting at USD 47 million (KES 6 billion) and increasing by 10% every five years. Despite generating over 80% of KAA’s revenue, JKIA is underfunded, handling 10 million passengers annually, though it was designed for 7.5 million. Kenya’s aviation sector needs Sh260 billion for upgrades, with half required for JKIA.
Adani has opposed competitive bidding due to potential delays and plans to complete the first phase by 2029, aligning with Vision 2030. The deal includes raising airport charges and a fixed concession fee, starting at USD 47 million (KES 6 billion) and increasing by 10% every five years. Additionally, Adani has requested the government establish a fund to cover damages in case of contract termination.
The proposal allows Adani to hedge against financial risks, such as interest rate fluctuations and exempts the company from complying with new laws that might affect contract terms. The company demands tax exemptions and exclusive rights to set fees for all airport services, maintaining the authority to manage JKIA independently. Adani’s conditions further include preventing the development of competing airports for 30 years and seeking legal changes to ensure a monopoly over JKIA, contradicting Kenya’s Vision 2030 goals.
Despite controversies surrounding Adani’s bid, including allegations of stock manipulation, tax evasion, and environmental damage, the company remains a powerful player. Adani has denied accusations that the proposed deal was negotiated in secrecy.
During the public participation, stakeholders told KAA and the media that they believed Adani had been granted the project without their involvement from the beginning; they felt the process was just a rubber stamp exercise. Stakeholders, who claimed they should have been prioritized to fund the project, criticized the government for agreeing to a concession with a foreign company without involving them.
Rachel Ndegwa, the Chief Executive Officer at Swissport, an airport ground services and air cargo handling company, criticized the PIP agreement, saying that many of its terms were unclear, and called on the MD to ensure KAA protects businesses and the value of taxpayers. She questioned how JKIA would remain competitive at a time when regional governments were directly investing in their airports, while JKIA was being handed to Adani.
