My take on the Jomo Kenyatta International Airport (JKIA) concession saga. So far, much more heat than light. The government is behaving like it still doesn’t know that more disclosure is how you overcome public mistrust.
On the positive side, the contracting authority, the Kenya Airports Authority (KAA) has disseminated the full Privately Initiated Proposal by the Adani Group of India. The version disseminated is dated March 2024.
I have also read through the voluminous feasibility study that was submitted to KAA by Adani. I have had long off-the-record conversations with my sources from both KAA at the PPP Directorate under the National Treasury. I also visited the offices of the PPP Directorate where I had a long conversation on the subject matter with the Director-General, Christopher Kirigua.
It seems to me that the level of public distrust has reached such a high level that we are not even willing to accept the irrefutable and basic fact that no concession contract has been signed so far. The proposal by the Indians is yet to go through all the stages of approval.
The PPP Act provides for lengthy approval processes for a Privately Initiated Proposal (PIP). As a matter of fact, an approval of a PIP does not even create any legal obligation on the part of the government.
And, there is an inter-ministerial PPP committee that must approve the proposal by Adani after which KAA has six months from the date of such approval to finalise the development project phase.
The law obliges the government to appoint an independent consultant to manage implementation of the project agreement.
On Tuesday July 30, the Prime Cabinet Secretary, Musalia Mudavadi was forced by the mounting fight against the project to put out a public statement where he categorically stated that no deal had been signed and that the proposal still has to be taken to Parliament for approval.
I think that the debate about this project should now shift to discussing terms of the ongoing negotiations of the development phase. Shouldn’t we be discussing concession fees? Do we want annual payments of concession fees or revenue sharing mechanisms?
What minimum levels of investments should we be setting for the Indian investors? What is to be the fate of existing KAA personnel and shouldn’t we be setting limits on the numbers that may be laid off or made redundant?
If the Indian investors will be building terminal and runways, who will be responsible for design specification? This is a pertinent issue because airports are national icons and therefore the public may want to be involved in the architecture.
I have heard the proposal that we should be negotiating an arrangement where we only concession to the Indian investors airside activities and retain land side actitivities- airport parking, collection of airport tax to KAA. Are such an arrangement feasible?
In recent airport concession projects in other countries, the issue exclusivity tends to raise a lot of controversy.
Is the government going to give an undertaking under the deal to ensure that other airports are not built within a certain geographical area?
The point here is the following: That public discussion on this concession project should now go beyond mere scandal- mongering to discussing merits and demerits.
Some of my sources who are close to the negotiations with the Indians have whispered to me that one of the issues that has become contentious is whether the Indians should be allowed the leeway to appoint and chose Engineering, Procurement, and Construction (EPC) contractors without either competitive bidding or government involvement.
Apparently, some tough negotiators on the government side are insisting on an arrangement where the government becomes fully involved in choice of EPC contractors brought in to build runways, terminals and real estate and that they must be procured jointly and competitively.
The government is now saying that it has learnt from recent experiences that the reason some of the infrastructure concessions it tried ended up proposing high consumer prices and toll fees was because EPC contractors building the projects were procured un-competitively.
The example cited in this regard is the botched plan to concession the Rironi-Nakuru- to -Mau Summit road to the French Group, Vinci, under a PPP deal. Apparently, the French investors had proposed road tolls that were deemed unaffordable by the government.
“The EPC cost on that road toll project were simply outrageous,” one of my sources argued during our conversation.
Still, we must opposition to the JKIA PPP deal to be very stiff because very powerful interests have vested interest in profitable existing concessions in businesses at the airport, including services such as ground handling, duty free shops, aircraft technical services, advertising bill boards, and inflight catering services.
If the deal goes through, some of the existing contracts entered with some of the vendors may be terminated, varied, or novated as part of the transition process.
