Adani fights back on JKIA leasing deal
Chairman of the Adani Group, Gautam Adani.
Indian firm Adani Airports Holdings Limited has staged a fightback against cases filed to block its deal to take over the running of Jomo Kenyatta International Airport (JKIA) in Nairobi.
In a response filed at the High Court in Nairobi, the company argues that the cases are premature because they seek to stop a project that is still at the due diligence stage and is yet to be approved.
Adani says the poor infrastructure at Kenya’s largest airport called for an urgent need to improve the status of JKIA to a world-class airport.
The investors claim they developed an interest in investing and improving JKIA following media reports on the poor status of the airport and lodged the privately initiated proposal with the Kenya Airports Authority (KAA) on March 1, 2024.
“In the proposal, the 5th respondent (Adani Airports Holdings ltd) gave a detailed analysis of the project delivery plan, a justification for using the privately initiated proposal (PIP) method, the value for money and affordability of the project, the positive impact of the proposed PIP method and also disclosed all the financial implications of the project,” the Indian firm said in response to a petition filed by Kenya Human Rights Commission and Law Society of Kenya (LSK).
The High Court temporarily suspended the proposed leasing plan and directed the case to be heard on October 8.
KHRC and LSK argued that JKIA is a strategic and profitable national asset and the deal is, therefore, irrational and violates the principles of good governance, accountability, transparency, and prudent and responsible use of public money.
Through the law firm of Hamilton, Harrison and Mathews, Adani has also opposed the case being heard by the High Court, holding that the dispute should be handled by Public Private Partnership Petition Committee.
“The applicants (KHRC and LSK) have failed to exhaust the dispute resolution mechanism in the law and therefore, this court lacks jurisdiction to hear and determine this matter,” the Indian firm said.
Adani said in the deal, it proposed to establish a new passenger terminal, build and refurbish existing passenger terminal buildings to increase the passenger capacity of the terminals and provide state-of-the-art amenities and facilities within the proposed new terminal and also at the existing terminals.
The firm also said it proposes to enhance the airside pavement works including constructing new taxiways, rapid exits taxiways and aprons and also undertake other improvements as necessary for the modernisation of JKIA.
Adani said the PIP was cleared for the project to proceed with the feasibility study phase.
“The 5th respondent also provided a preliminary operating plan for the project and the report confirmed that the project is aligned with the national infrastructure priorities and is aimed at curbing the perennial infrastructure flaws and deterioration that has been witness at JKIA,” Mr Alok Patni, an authorised signatory, said in an affidavit.
The firm said the plan will tremendously benefit Kenyans because if signed, it will elevate the status of JKIA and also increase job opportunities for both skilled and unskilled workers.
“Given the huge financing requirement to improve JKIA, the public-private partnerships, can only provide the necessary capital infusion to expedite upgrades and rapid modernization of infrastructure,” Mr Patni said.
He added, “I confirm that the project is still at the review and due diligence stage and the averments by the applicants that the JKIA has since been leased for 30 years is premature and is an outright misrepresentation of facts.”
In the petition, KHRC and LSK said Kenya can independently raise the estimated $1.85 billion or Sh238 billion needed to expand JKIA without leasing the airport for the stated period.
“Thus, the Adani proposal is unaffordable, threatens job losses, exposes the public, is proportionately to fiscal risk, and offers no value for money to the taxpayer,” lawyer Dudley Ochiel said in the application.
It is LSK’s argument that Kenya would surrender the operational and profitable JKIA to Adani for 30 years in exchange for 238 billion.
“Thus, the proposal would deprive the public of, and transfer to Adani, all the current revenues, receipts, expenditures and other financial transactions over JKIA. Although the project is dubbed a Built Operate Transfer, KAA would be handing over an existing and operational airport to Adani,” Mr Ochiel said.
He added that at the end of the 30 years, Adani would, in perpetuity, retain an 18 percent equity stake in the aeronautical business at JKIA.
“Thus, after 30 years, Adani would be entitled to an 18 percent concession fee starting at Sh6 billion and increasing by 10 percent every five years forever. In this way, the Adani proposal violates Article 201(c), demanding that the burden and benefits of using resources and public borrowing be shared equitably between present and future generations,” he said.
Another case, challenging the leasing plan, has been filed by activist Tony Gachoka and Mount Kenya Jurists and also Mr Issack Lango Guyo.
