MPs call for audit of KAA-Adani JKIA upgrade deal amid graft concerns

Members of the National Assembly have ordered a forensic audit on the deal between the Kenya Airports Authority (KAA) and India's Adani Holdings regarding the proposed upgrade of Jomo Kenyatta International Airport (JKIA).

The Public Investments Committee on Commercial Affairs and Energy wants the auditor general to investigate how Adani became involved in the project.

In light of ongoing court orders, the committee also directed KAA to cease any further negotiations with Adani on Tuesday.

"It is the advice of the committee that you don't do anything with Adani until this committee reports this matter to Parliament," stated the committee's chairman, David Pkosing.

The MPs also cautioned KAA's acting CEO, Henry Ogoye, about the serious consequences of violating this directive.

"You will carry personal responsibility. The House with the power to do these things is the National Assembly. We will do our work as a committee," Pkosing warned.

The lawmakers requested a special audit report to be submitted by the end of October.

The committee aims to clarify the estimated costs involved in upgrading the airport and how the proposed $1.83 billion (Sh230 billion) was determined.

They want auditors to examine the project's scope, which includes building a new terminal and a second runway.

MPs also seek to determine the most effective way to engage a private sector partner and whether a privately initiated investment proposal (PIIP) is the best approach.

"The question we seek information on is whether there is an alternative way to save people money instead of the PIIP route," Pkosing said.

Additionally, the audit will assess how the arrangement affects other airports and aerodromes that rely on JKIA for their operations.

The committee will investigate how the private manager would collaborate with the national airline and the implications for KAA staff.

This call for an audit arose after KAA's acting managing director, Henry Ogoye, struggled to provide satisfactory answers to the committee's questions.

Concerns were raised about the quick involvement of Adani, which came just two weeks after a Spanish consultant, ALG, issued a feasibility report.

"How did you procure the consultant that did the feasibility study? How did Adani know there was a proposal on the table? Did you tailor-make this deal for them? Is it the only one in the whole world?" committee members asked.

However, Pkosing emphasised the necessity of a special audit, noting the high level of distrust in the country due to corruption.

"There is a high trust deficit in the country because of corruption. People think of deals being made when it comes to such projects," he said.

The legislator questioned how an investor could show up just two weeks after the feasibility report was published, suggesting that Adani may have had prior knowledge.

The committee hinted at possible collusion, asserting that there appeared to be "mischief and an inside job" in the selection of Adani.

However, they clarified that the audit does not intend to "kill the good dream of upgrading JKIA." Pkosing remarked, "Greenfield was killed by unscrupulous people. If we don't do anything, JKIA is going to die. All we are saying is that we should involve Kenyans."

In his submissions, KAA managing director Ogoye explained that KAA had conducted a study showing that much of the equipment at JKIA is outdated.

However, MPs questioned how the authority allowed such deterioration despite reporting annual profits.

"You collect revenue and report profits, why not plough it back to improve technology and equipment?" asked Rangwe MP Lilian Gogo, who is also the vice chair of the committee.

The committee is seeking clarity on why Adani paid $50,000 (Sh6.4 million) prior to signing any agreement.

"Was the public involved? Were elected representatives involved? Was the power of intent exercised?" MPs inquired.

Ogoye defended the payment, stating it follows legal requirements mandating that bidders pay an amount once a proposal is evaluated. "If there is any contract to be signed, it has to be done by me and I have not done anything," he said.

He added that upgrading JKIA is essential, as the airport's facilities are currently overstretched.

"Our capacity is for 7.5 million passengers. Last fiscal year, we handled 8.6 million. The terminal capacity is below the demand," Ogoye explained.

While JKIA should be capable of handling 35 flights per hour, it currently manages only 32, lacking sufficient parking for cargo aircraft.

"We should park 68 aircraft but we can only park nine cargo aircraft at a time now, forcing cargo aircraft to use passenger parking," the MD stated.

KAA has conducted two feasibility studies, as the initial report did not specifically address JKIA's issues.

"We could not make an investment decision with the December 2022 report. We did a detailed report on JKIA," Ogoye added.

It was noted that the feasibility study was released on February 16, 2024, and Adani submitted its proposal just one week later.

The same consultant had previously assessed the viability of KAA's facilities and issued a report in December 2022.