On Adani’s proposal to lease Kenya’s Nairobi airport | Explained Premium

Kenyans protest Adani Group's 30-year lease of Nairobi airport, sparking national outrage and legal action.

The story so far: Kenyans are protesting a proposed takeover of Nairobi’s Jomo Kenyatta International Airport (JKIA) by India’s Adani Group on a 30-year lease. Last week, airport workers went on a day-long strike, leading to flight cancellations that left hundreds of passengers stranded. The workers called it off when the government agreed to give them veto power on the final agreement.

The refurbishment and expansion of the Nairobi international airport has been in the works since 2013. The plans included building a new passenger terminal, another runway, and expanding the capacity to 20 million passengers a year. But for various reasons, the contract was cancelled in 2016, and the project was dormant until 2022. In June 2023, the government announced it would publicly invite bids to revive the project. However, in July this year, a Kenyan whistle-blower posted on social media that the government had secretly signed a deal with the Adani group to manage the airport for 30 years. The news generated nationwide outrage, with local commentators criticising the move to “give away” control of a “strategic national asset” to a foreign company.

According to media reports based on leaked documents, in March 2024, Adani Airport Holdings Ltd had submitted a Privately Initiated Proposal (PIP) to the Kenya Airport Authority (KAA) to refurbish the JKIA under a build-operate-transfer model with an investment of $1.85 billion. Under the proposed deal, the Adanis would refurbish the airport, add a new runway, and possibly a terminal. They would fund this with their own investment and from revenues generated from the airport, which they will control for 30 years. At the end of this period, the Adanis would get 18% equity in the airport. To protect their commercial interests from unforeseen competition, the Adani proposal included a stipulation that no airport shall be built within a 100km radius of the JKIA. It also projected a sharp hike in annual fees that would be transferred to airport users.

It has emerged that in February 2024, a consultancy firm hired by the KAA to advise on expanding the JKIA had recommended an open tender process for securing a public-private partnership (PPP). This is also the preferred method under Kenya’s PPP Act. Kenyans are asking why the KAA and the government ignored the experts’ recommendation as well as the country’s PPP law to go ahead with the Adanis’ PIP. Senator Richard Onyonka, an opposition politician, in an interview to The Hindu, pointed out that Kenyans are concerned that the deal would give the Adanis a tax break for 10 years. He also claimed that the deal would allow the Adanis to fire all the employees currently on the rolls of the KAA — around 5,000— and rehire them on terms that could violate their rights. “Why didn’t the Adani team want to follow due diligence as laid out under the PPP Act, whereby there would have been three-four competitive bids, and Kenyans would have had a chance to interrogate the various offers and pick the best value-for-money option?” he asked. “It indicates that this is a corrupt deal and we believe money has exchanged hands” he alleged, echoing a growing sentiment among the Kenyan public.

The Law Society of Kenya and the Kenya Human Rights Commission have filed a joint application against the deal in the high court. The court has issued an order suspending further movement on the Adani proposal pending a judicial review. The Adanis hold that it is in Kenya’s best interest to go for a PIP rather than open tendering, noting, “PIP allows the government to secure terms beyond purely financial considerations, ensuring the welfare of citizens,” and that “competitive bidding” besides being time-consuming, “risks making the deal purely transactional, without room for mutual considerations.”