India's Adani Energy gets approval for Sh117bn power line project in Kenya

Investment relations between Kenya and India could be gaining ground at a faster pace following the latest power line deal approval worth Sh158 billion.

Treasury approved the deal, which will use the public-private partnership (PPP) model to oversee the construction of transmission lines and substations in the country's eastern and western regions.

The deal will also include Africa 50, the continental organisation established by African governments and the African Development Bank to help bridge Africa's infrastructure funding gap by facilitating project development, mobilising public and private sector finance, and investing in infrastructure on the continent.

In the joint deal, Adani Energy Solutions, the power distribution arm of India's Adani Group, will invest Sh117 billion to build a 206 km 400 kV transmission line and a 95 km 220 kV line.

On the other hand, Africa50 will invest Sh41 billion to construct a 177 km 400 kV line and a 64 km 132/33 kV line.

Kenya's National Treasury confirmed in its draft Budget Policy Statement (BPS) this year that the project development or feasibility study report was completed, submitted, and approved in May 2024, which paved the way for the project to progress to contract negotiations.

The approval comes barely a month after Adani Airport Holdings Limited (AAHL), still an arm of the Adani Group, proposed to invest Sh238 billion (US1.84 billion) to expand and run the Jomo Kenyatta International Airport (JKIA).

Treasury and the Kenya Airport Authority (KAA) recently confirmed the deal, which triggered a widespread public outcry over how the firm managed to get the tender and whether the deal would lead to the sale of the national carrier.

Under the deal, the government would grant concessions to Adani to finance, build, and operate the project for 30 years, then give the company an equity stake in perpetuity.

The deal points towards the government's move towards PPPs for infrastructure projects, as mounting debt cuts the government's spending on new roads, power lines, railways, and airports. However, questions about the process's opacity and some projects' high costs persist.

Foreign Affairs Cabinet Secretary Musalia Mudavadi, on July 30, however, claimed that the government had not yet signed any agreements with Adani Airports Holdings Limited over upgrading the JKIA infrastructure.

He added that the proposal was undergoing due process, including reviews and negotiations.

"For the avoidance of any doubt, all terms and conditions of the proposed arrangement are subject to negotiation in accordance with the provisions of the PPP Act, and no terms have been agreed upon yet," Mudavadi explained.

"As and when the terms are agreed, there shall be appropriate safeguards to ensure that Kenya's national interest prevails and that the private party is held fully accountable for the performance of its obligations," he added.