State Department for Transport Principal Secretary Mohamed Daghar when he appeared before the Transport and infrastructure committee in Parliament on March 9, 2023. PHOTO | LUCY WANJIRU | NMG
The Kenya Airports Authority (KAA) will take 50 years to raise the Sh200 billion ($1.85 million) that Adani Airports Holdings Ltd is seeking to inject into the expansion of the Jomo Kenyatta International Airport, MPs have been told.
Transport Principal Secretary Mohamed Daghar told the National Assembly’s Committee on Implementation that the Indian conglomerate intends to invest $1.85 million over a concession period of 30 years.
He said KAA generates Sh4 billion as net revenue annually and it will take 50 years for it to improve facilities at the JKIA.
“Adani is seeking to develop JKIA for $1.85 million over a 30-year concession. We have no fiscal space to invest this kind of money. KAA makes net revenue ofSh4 billion annually yet we need Sh200 billion to develop infrastructure at the JKIA,” Mr Daghar told MPs.
“JKIA was designed to handle 7.6 million passengers annually but we are currently handling 8.2 million. It will take KAA 50 years to upgrade infrastructure at the airport.”
Mr Daghar told the committee chaired by Budalangi MP Raphael Wanjala that the government is 10 years late in upgrading facilities at the JKIA.
He said the airport suffered a fire incident in 2014, the proposed construction of the Greenfield Terminal was terminated, and the JKIA is currently congested.
“Adani Airports Holdings Limited will invest money over some time without the government paying anything,” he said.
“Adani will also pay concession fees to the contracting authority (KAA) over the 30 years even as they recoup their investments.”
Mr Daghar was responding to questions filed by Embakasi West MP Mark Mwenje who demanded to know whether Adani Airports Holding deal favours Kenya Airways or will open JKIA to airlines from India and Asia to compete with the national carrier.
Mr Daghar appeared before the committee alongside Kenya Airways Chief Executive Alan Kilavuka and KAA Acting Managing Director Henry Ogoye to shed light on the status of implementation of the House resolution on nationalisation of KQ.
Mr Daghar said the issue of Adani Holdings Limited Privately Initiated Proposal (PIP) is currently before the High Court.
Secret clearance
The plan to lease JKIA to AAHL— a subsidiary of Adani Group— flew into headwinds after a whistleblower lifted the lid on the deal in July.
KAA secretly cleared AAHL to take over JKIA, before a court order slammed the brakes on the plan.
The Indian firm's approval came in 17 days, even as KAA sat on another proposal from an Argentinian firm, the Corporation América Airports SA.
Besides the process in which the deal with Adani was inked, the Indian firm is also the subject of lawsuits in its home country over bribery allegations and question marks over its books.
The concession to AAHL would see the Indian firm spend $1.85 billion (Sh238 billion) to upgrade and expand JKIA and operate it for 30 years, after which it would transfer the facility back to KAA.
But KAA and Adani will have to agree on the value at which the facility will be transferred, with a guaranteed internal rate of return on equity of 18 percent.
Experts have also questioned the rationale behind the deal compared to Rwanda and Ethiopia, both of whom are building new airports without handing over operations of the facilities to the investors.
Airport workers have also opposed the deal amid fears that they would lose their jobs upon expiry of a two-year period in which AAHL said that it would absorb the current employees.
They have maintained that leasing out JKIA to Adani Airports Holdings Limited (AAHL) should be done through competitive bidding given its strategic importance.
