A parliamentary committee has called for a forensic audit into the deal between Kenya Airports Authority and India’s conglomerate Adani Holdings on the proposed upgrade of Jomo Kenyatta International Airport (JKIA).
The National Assembly Public Investments Committee on Commercial Affairs and Energy chaired by Pokot South MP David Pkosing wants the Auditor General to reveal how Adani was handed over the deal.
In a meeting with the top management of Kenya Airports Authority (KAA), led by acting CEO Henry Ogoye, Mr Pkosing warned that no activity should take place until the audit report is presented before the committee.
“It is the advice of the committee that you don't do anything with Adani until this committee reports this matter to Parliament,” Mr Pkosing said.
“You will carry personal responsibility. The House with the power to do these things is the National Assembly. We will do our work as a committee, “he added.
In the audit, the committee wants the auditor to unearth how Sh230 billion figure of improving the airport was arrived at.
The committee also called on the auditor to find out and confirm the cost of building a new terminal and a second runway.
Further, the lawmakers also want the forensic audit to ascertain whether the PIP was the best deal for the project and whether there is an alternative way of saving taxpayers’ money.
The committee also directed that the forensic audit should clearly detail how the new airport manager will work with the national airline and the fate of the current staff of Kenya Airports Authority.
As the committee was calling for a forensic audit, Mr Mbadi told the committee on public debts and privatisation that any application on tax exemption by Adani would be reviewed and must be in line with the country's laws.
Appearing before the committee over the deal, Mr Mbadi said the 30-year tax exemption requested by the Indian firm will be subjected to cost analysis and benefits that will accrue to Kenyans before granting any such requests.
Mr Mbadi also told the Abdi Shurie-led committee that before the deal is signed, the risk matrix for the entire 30-year period will be reviewed
Further, Mr Mbadi said the percentage of revenue that Adani is supposed to collect from the airport within 30 years has also been reviewed from the 18 percent proposed by the form to 16 percent.
“We have so far negotiated and reduced the percentage from 18 to 16 percent, the percentage includes 12 percent as the best rate and four percent as the margin. The 16 percent we negotiated was based on the rates at the Central Bank of Kenya,” Mr Mbadi said.
The CS told MPs that the door is not yet closed for any firm that still wants to come in for the JKIA improvement as the government has yet to sign any binding deal with Adani.
“The law provides that if we get a better offer, we can stop Adani, the only thing we need to do is that the new firm will compensate Adani on any financial cost incurred up to this point of the process,” Mr Mbadi said.
“We have not finalised anything hence any other party which can do the work will come over. We are still waiting for the courts, if they say terminate, we will, if it says continue, we will through the law,” he added.
Mr Mbadi told critics who have been saying that there are other firms with better deals to come over and present their proposal to KAA for review.
“I hear people saying there are many other firms who can do a better job, where are they? If we really love this country, this is the best time to come on board when the Adani matter is in court,” Mr Mbadi said.
He told the lawmakers that the government resorted to the Privately Initiated Proposal (PIP) because the country was in a bad place financially and couldn't finance the project.
“I’ve been at the treasury now for a few weeks. I can tell you that international financing is shrinking and no one wants to give us money, so if we can get a person who can put his money to finance a project so that he can get back his money and we also benefit, then it’s a good deal,” Mr Mbadi said.
“The financial situation of KAA, which is the contracting authority, is not looking good as it made a loss of Sh4 billion during the Covid period,” he added.
Mr Mbadi pointed out the Adani deal is still at the preliminary stage and the public will be engaged fully before the agreement is taken to the Attorney General and Treasury before being taken to the Cabinet.
“The process will be taken to the Attorney General and CS treasury to prepare a memo to be taken to Cabinet, if in this process there is an illegality and questions to terminate it, then we will,” Mr Mbadi said.
He told MPs that the government did a feasibility study which was done by a Spanish firm called AMG, the firm submitted its report on 14th February 2024 and final report on 19th. The firm however stopped its engagement and KAA contracted Ashitiva firm which is currently handling both the financial transactions and also conducted another feasibility study.
Mr Mbadi however admitted that the government could have divulged more details on the deal earlier enough to avoid any suspicion.
“One of the biggest issues on this matter is secrecy, I'm convinced that the public should have been engaged earlier,” Mr Mbadi said.
But even as he said the country can cancel the Adani deal, he warned that the country needs to be careful about how it handles the process in order not to scare away other potential investors
During the KAA meeting with MPs, Mr Ogoye, in his submissions, told the committee that KAA did a study and found that equipment used at JKIA was obsolete.
He assured the committee that no deal had been signed. “If there is any contract to be signed, it has to be done by me and I have not done anything,” Mr Ogoye said.
While defending the deal, Mr Ogoye said it was necessary because the current JKIA facilities are overstretched and obsolete.
“We are behind in terms of infrastructure. Our capacity is for 7.5 million passengers. Last fiscal year, we handled 8.6 million. The terminal capacity is below the demand.” Mr Ogoye said.
He pointed out that JKIA should handle 35 flights per hour but currently does only 32, and that it has no space for parking cargo aircraft.
“We should park 68 aircraft but we can only park nine cargo aircraft now, forcing cargo aircraft to use passenger parking,” Mr Ogoye said.
