Kenya has given the green light to a significant infrastructure proposal from Adani Energy Solutions, the power distribution arm of India’s Adani Group.
The project, valued at $907 million, involves the construction of transmission lines and substations in the Eastern and Western regions of the country.
Adani’s Role in the Project
Adani Energy Solutions, a major player in power distribution with over 21,000km of lines under its management, will spearhead the construction of 371km of new transmission lines and five substations. This initiative will be executed under a Public Private Partnership (PPP) model.
Project Timeline and Context
The Kenyan Treasury has confirmed that the project development and feasibility study report was completed and approved in May 2024, paving the way for contract negotiations.
This development comes amid growing public concern over another agreement with Adani Airport Holdings regarding the renovation and operation of Jomo Kenyatta International Airport (JKIA).
Upgrading Kenya’s Aging Power Grid
The Adani power transmission project is a crucial part of Kenya’s efforts to modernize its outdated distribution lines, aiming to reduce power losses and frequent outages that have plagued the country’s electricity supply.
Concerns over PPPs and Transparency
Kenya has increasingly relied on Public Private Partnerships (PPPs) to finance infrastructure projects due to mounting debt and reduced government spending on vital infrastructure like roads, power lines, and airports.
However, these PPPs have faced criticism for a lack of transparency and concerns about inflated project costs.
JKIA Deal Controversy
A recent example is the $1.85 billion JKIA concession, which faced public backlash due to its opaque nature.
Despite President William Ruto initially denying knowledge of the deal, the Kenya Airports Authority (KAA) later confirmed it through an advertisement in local newspapers.
This 30-year concession grants Adani Group’s hospitality arm control over the country’s primary airport, fueling public outrage.
Adani Group’s Global Expansion
Gautam Adani, the founder of the Adani Group and one of Asia’s wealthiest individuals, has been actively seeking to expand his infrastructure empire into new markets as the impact of damaging corporate fraud allegations subsides.
In 2023, Hindenburg Research accused the company of engaging in market manipulation and “brazen” fraud.
Overcoming Challenges and Recovering from Stock Sell-Off
While the Adani Group denied these allegations, they triggered a massive $140 billion sell-off of the company’s listed stocks.
However, the stocks have since recovered, and the company recently announced a successful $1 billion equity sale with significant participation from US investors, marking its first such fundraising since the scandal.