Treasury Secretary John Mbadi is set to testify before the Senate on Monday following a request by Kisii Senator Richard Onyonka for a statement on plans to lease the Jomo Kenyatta International Airport (JKIA) to a private company.
Mbadi will appear before the Senate Committee on Roads and Transport barely a week after Roads and Transport Chairman Davis Chirchir struggled to convince Kenyans that the government was yet to award a contract to Indian company Adani Airport Holdings Pvt.
Senator Onyonka had sought confirmation that Kenya Airports Authority (KAA) had signed an agreement with Adani to lease JKIA under a build-operate-transfer model under a public-private partnership. The Kisii senator had called for the disclosure of the terms of the agreement and associated costs to be borne by airlines and other users of JKIA.
Chirchir told the Senate that based on Adani Airport Holdings Limited’s PIP application dated March 1, 2024, no concession agreement exists between KAA and the company and stakeholder consultations, due diligence and drafting of a concession agreement are currently underway.
The Senate committee was chaired by Kiambu Senator Kalungo Tanwa.
“Adani Airport Holdings Ltd of India has submitted a PIP to ‘build, operate and transfer’ JKIA on public-private partnership (PPP) model as the government is pursuing the PPP model due to financial constraints faced with severe infrastructure constraints,” Chirchir told the committee.
Senator Kisii called on the CS to clarify whether public participation had been carried out and if not, at what stage it would be carried out.
Chirchir said the legislation would see public participation after the feasibility phase.
The roads department said it has commenced public participation which includes engagement with KAA senior management, department heads, 500 staff, affiliate airlines (Kenya Airlines Association), ground staff, retailers, concessionaires, Kenya Civil Aviation Authority (KCAA) and Kenya Airways.
He said the matter has already been submitted to the court and the government would provide all relevant information, including to all other stakeholders, to clarify the proposed deal between JKIA and Adani.
“Let us recall the significant benefits that this proposed model is expected to bring to the country, including enhanced operational excellence and regional competitiveness as an aviation hub through modernized facilities that balance capacity, improving service quality and associated trade activities while sustaining Kenya as a hub country of choice in the region,” Chirchir said.
Onyonka called on the roads authority to provide contractual documents of the agreement and to clarify the ownership of Adani Commercial Limited, the process followed for identifying and awarding the lease and whether there was any public participation in the process.
In response, Chirchir said the government has not reached the contract stage and only has a document in principle outlining key negotiating points that will help draft the concession agreement, pending finalisation of stakeholder engagement and due diligence.
Senator Kisii called on the CS to explain the process that led to the decision to award the private proposal to Adani Commercial Limited.
“Though Kenya Airports Authority has not awarded any contract to Adani, the PIP is an unsolicited proposal and any private entity can submit a PIP to a contracting authority like KAA at any time. Once the PIP is accepted, due process will be followed,” Chirchir said.
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The CS explained that this includes initial due diligence, appraisal, evaluation of the appraisal report by the PPP Office, approval by the PPP Committee, preparation of a bankable feasibility report, guidance by the PPP Committee on suitability of the PPP and procurement methodology, review of the project and financial risk matrix by the PPP Committee and approval to proceed to negotiations.
He said the PPP committee has given its approval to proceed with negotiations subject to stakeholder engagement and due diligence. If negotiations are concluded successfully, it will be submitted to the committee for approval and then to the attorney general for approval before finally being submitted to the cabinet.
Meanwhile, Chirchir told the Senate that the medium-term investment plan involved a high-level technical, economic and financial assessment of six major airports covering JKIA, Moi, Eldoret, Wilson and Kisumu airports, as well as a detailed feasibility study on JKIA by Spain’s ALG under the auspices of KAA, which guided the investment decision.
He said the infrastructure deficit in the sector is a result of the National Aviation Policy Study and Medium-Term Investment Plan of December 2022, carried out by Spain’s ALG as a client of the PPP Bureau, and policy guidelines for the sustainable development of the civil aviation sector on aviation planning and development, security, safety, environment, technology, human resource development, and data and information management.