Cabinet Secretary John Mbadi revealed that the Treasury had outlined 22 conditions, including the absorption of all JKIA staff, before the controversial deal with Adani Airport Holdings was approved.
Mbadi told the Senate Committee on Roads, Transport and Housing that Adani’s private initiative proposal (PIP) would not be approved by the Public-Private Partnership (PPP) Commission until 22 conditions were met.
“National Treasury cannot approve the Jomo Kenyatta International Airport (JKIA) project development contract until Adani Holdings meets the 22 conditions,” Mbadi said.
“The process cannot proceed to completion until Adani Airport Holdings meets all the conditions.”
Mbadi told the committee that the PPP committee chaired by Principal Secretary to the Ministry of Finance, Chris Kiptoo, has directed the Kenya Airports Authority (KAA) to ensure that current employees of JKIA are given priority and are recruited by the concessionaire (Adani) on better terms and conditions.
He said the PPP committee had also directed the KAA to ensure that operators give priority to the recruitment of Kenyan nationals in all positions.
Mbadi told the committee chaired by Kiambu Senator Kalungo Tanwa that the Adani PIP was approved following the approval of the PPP Committee.
“The PPP Office has not approved any stage of the PIP by Adani Airport Holdings Pvt Ltd without the approval of the PPP Committee,” Mbadi said.
“All approvals were sought through technical working documents which assessed the projects, made recommendations and were submitted to the committee.”
Mbadi told the committee that the PPP committee had demanded Cabinet concurrence for the implementation of the project before signing the concession agreement.
The PPP Committee also directed KAA to proactively consider the needs of stakeholders and conduct detailed due diligence of Adani Airport Holdings Ltd in accordance with Section 27 of the PPP Act.
The PPP has directed that any material changes to the master agreement terms be referred back to the PPP Committee for approval.
KAA must obtain legal approval for the concession agreement in accordance with Section 60(2) of the PPP Act.
The PPP Committee also directed that several issues need to be addressed in the concession agreement.
The PPP Committee also requested that the PIP include clear provisions on open book accounting to ensure optimal performance and full disclosure of project accounts during audit and calculation of government share of revenues.
The Committee also called for a comprehensive review of the risk matrix to ensure that all risks have been identified, appropriately allocated and adequate mitigation measures provided.
The Ministry of Finance also called for a clearly defined capital expenditure schedule and development plan for the renovation of existing terminals.
“The draft agreement should ensure that the concessionaire is incentivised to achieve revenue and EBITDA targets within current aeronautical and non-aeronautical costs and that the implementation of the project will not result in an immediate increase in aeronautical and non-aeronautical costs. Any subsequent tariff increases should follow due procedures,” Mbadi said.
The PPP Committee requested that how the cargo business fits within the scope of the concession be clearly articulated and defined and that local content should be taken into consideration in accordance with Section 83 of the PPP Act 2021.
The PPP Committee led by Dr Kiptoo demanded that the Contracting Authority (KAA) should seek guidance on the issues raised by the PPP Office.
Mbadi told the committee investigating the controversial deal that due diligence on Adani Airport Holdings was on hold pending the trial.
The Law Society of Kenya (LSK) and the Kenya Human Rights Commission (KHRC), which filed the petition in the high court, said the estimated $1.85 billion (Sh238 billion) needed to upgrade the airport could be raised without the decades-long lease agreement.
KAA said Adani’s proposal to refurbish the facility and invest in a new terminal and runway was needed to revamp the “ageing infrastructure” of East Africa’s largest airport, which handles more than 6.6 million travellers a year.
The proposed takeover by India’s largest private airport operator sparked protests in Kenya when it became public in July, with police blocking demonstrators calling for the airport to be closed.
Kenya’s aviation workers’ union also opposed the plan, arguing it would lead to job cuts and foreign hiring.
