Treasury Cabinet Secretary John Mbadi (left) and Indian billionaire Gautam Adani.
The National Treasury gave 22 conditions, including the absorption of all JKIA staff before the controversial Adani Airports Holdings deal can be approved, Cabinet Secretary John Mbadi has revealed.
Mr Mbadi told the Senate Committee on Roads, Transportation and Housing that the privately initiated proposal (PIP) by Adani will not be cleared by the Public Private Partnership (PPP) Committee before the 22 conditions are met.
“The National Treasury cannot approve the project Development Agreement for the Jomo Kenyatta International Airport (JKIA) until the 22 conditions are met by Adani Holdings,” Mr Mbadi said.
“The process cannot proceed to a conclusion until all conditions are met by Adani Airports Holdings.”
Mr Mbadi told the committee that the PPP committee chaired by Treasury Principal Secretary Chris Kiptoo directed the Kenya Airports Authority (KAA) to ensure that current employees of JKIA are onboarded by the concessionaire (Adani) on priority basis and better terms.
He said the PPP Committee also directed the KAA to ensure that the concessionaire gives preference to the recruitment of Kenyan nationals in all positions.
Mr Mbadi told the committee chaired by Kiambu Senator Karungo Thang’wa that Adani PIP was approved after clearance by the PPP Committee
“The PPP Directorate has not approved any stage of the PIP by M/s Adani Airport Holdings Limited without the approval of the PPP Committee," Mr Mbadi said.
"All approvals were sought through Technical Working Papers that assessed the project and provided recommendations and submitted to the Committee."
Mr Mbadi told the committee that the PPP Committee required that before signing the Concession Agreement, Cabinet concurrence on the implementation of the project be sought.
The PPP Committee also directed KAA to undertake a detailed stakeholder engagement to proactively consider their needs and undertake a detailed due diligence exercise of the Adani Airport Holdings Limited, in accordance with Section 27 of the PPP Act;
The PPP directed that any material changes to the Heads of Terms should be referred back to the PPP Committee for approval.
KAA is required to obtain the legal clearance of the Concession Agreement in accordance with Section 60(2) of the PPP Act.
The PPP Committee also directed that a number of issues should be addressed in the Concession Agreement.
The PPP Committee also demanded that PIP include clear provisions for open book accounting to ensure optimal performance and full disclosure of the project accounts during audits and for calculation of government share of income.
The committee also required that a comprehensive review of the risk matrix to ensure that all risks are identified, appropriately allocated, and suitable mitigation measures are provided.
The Treasury also required that the Capex schedule and development plan for the refurbishment of the existing terminal should be clearly defined.
“The drafting of the Agreement should ensure that the concessionaire is incentivised to meet revenue and EBITDA targets within the current aeronautical and non-aeronautical charges so that the project’s implementation does not result in an immediate increase in aeronautical and non-aeronautical charges. Any increase of charges thereafter should follow the due process,” Mr Mbadi said.
The PPP Committee required that cargo business should be well articulated and defined as to how it fits within the concession and that local content should be considered in accordance with Section 83 of the PPP Act, 2021.
Dr Kiptoo-led PPP Committee demanded that the contracting authority (KAA) should seek guidance on the issues raised by the PPP Directorate.
Mr Mbadi told the committee that is probing the controversial deal that due diligence on Adani Airports Holdings has been put on hold following a court case.
The High Court has temporarily blocked the proposal to grant the Indian conglomerate owned by Gautam Adani, India’s second-richest man, a 30-year lease to operate JKIA.
The Law Society of Kenya (LSK) and the Kenya Human Rights Commission (KHRC), which filed a petition at the High Court, said the estimated $1.85 billion (Sh238 billion) needed to revamp the airport could be raised without a multi-decade leasing contract.
The KAA said Adani’s proposal to refurbish the facility and invest in a new terminal and runway was needed to spruce up the “ageing infrastructure” at the largest airport in East Africa, which receives over 6.6 million travellers annually.
The proposed takeover by India’s largest private airport operator sparked protests in Kenya when it was revealed in July, with the police blocking demonstrators who wanted to shut down the airport.
The Kenyan aviation workers’ union also opposed the plans, arguing they would lead to job cuts and the employment of foreigners.
