India’s Adani Group will build and operate the four Sh95.68 billion ($736 million) electricity transmission lines and two substations for 30 years before handing them over to Kenya.
These are part of the terms that the Kenya Electricity Transmission Company (Ketraco) and Adani Energy Solutions— the power subsidiary of Adani Group— signed on Wednesday, marking the country’s first public-private partnership-funded power project.
The lines to be financed through a combination of debt and equity are the 208.73-kilometre (km) 400 kilovolts (kV) Gilgil-Thika-Malaa-Konza, the 95km 220kV Rongai-Keringet-Chemosit and the 70km 132kV Menengai-Ol Kalou-Rumuruti lines.
Kenya has turned to the PPP model to fund the capital-intensive projects of building transmission lines and substations amid a cash crunch that has made it difficult for the exchequer to finance the projects.
“This agreement (Adani Energy Solutions and Ketraco) marks the beginning of a transformative initiative to develop, finance, construct, operate, and maintain key transmission lines and substations across Kenya,” Energy and Petroleum Cabinet Secretary Opiyo Wandayi said on Friday.
Adani will also construct a 400/220kV substation at Lessos and Rongai 132/33kV Thurdibuoro substation in Kisumu.
“Adani Energy Solutions will manage the transmission line for 30 years, ensuring long-term sustainability and efficiency, and thereafter transfer the project and all its assets to Ketraco.”
Kenya is grappling with an ageing power transmission line that has been blamed for countrywide outages, as the increase in new connections has not been matched by an upgrade of the system, exposing it to capacity constraints.
The lack of funds to expand the transmission network has left Kenya in the unfamiliar territory of being forced to ration power despite excess generation.
The government shifted to the PPP model to deliver power projects in line with a resolution by Parliament last year.
The deal with Adani Group marks the first successful attempt by the Indian firm to enter the country, following the now-suspended push to secure a concession lease to expand and operate Jomo Kenyatta International Airport for 30 years.
But the deal with Adani Energy Solutions has been marred by concerns over how the public participation was conducted, with a city-based law firm unsuccessfully pushing to have names of other firms that bid alongside Adani Group made public.
The law firm, IC Law LLP also wanted Ketraco to make public details on the financial health of the Adani energy subsidiary, findings of recommendations from public participation over the deal, and also the legal advice that the office of the Attorney-General gave Ketraco on the deal.
Besides the deal with Adani, Ketraco is also in an advanced stage of inking a PPP agreement with Africa50 to build the 400kV line from the Loosuk-Lessos line spanning 177km and the 64km 220kV Kisumu-Musaga transmission line.
Africa50 is owned by the African Development Bank and African governments that are members of the pan-African lender.
CS Wandayi added that four other lines, each with a capacity of 132kV and substations lined under the PPP model, are the Kisumu-Bondo-Rangala-Nyaga line, the Meru-Mau 132Kv line, Githambo-Othaya-Kiganjo line and Kitale-Tongaren-Webuye-Musaga lines.
