The Kenya Airports Authority (KAA) recently confirmed through a press statement that it had received a proposal from Adani Airport Holdings Ltd, for a public-private partnership (PPP) relating to a new passenger terminal building, a runway, and the refurbishment of existing facilities at Jomo Kenyatta International Airport.
The KAA intimates that the Adani Airport Holdings proposal was privately initiated.
As the name suggests, a ‘privately initiated proposal’ originates from a private party (in this case, Adani), and is not a response to a solicitation for bids.
It is, therefore, not a competitive procurement process. The PPP law sets out an elaborate procedure for the consideration of such proposals and permits the State agency to consider a privately initiated proposal if certain prescribed conditions are met.
These include where the project is aligned with national infrastructure priorities, provides value for money, can be delivered at a fair market price, and where there is efficient risk transfer to the private party.
Before such a proposal is evaluated, the private party is required to pay a mandatory, non-refundable review fee of the lower of 0.5 percent of the estimated project cost, or $50,000.
This review fee is paid into a fund known as the PPP Project Facilitation Fund, which has been set up to support activities related to the development of PPPs.
The PPP law also prescribes certain criteria to be considered during the evaluation of a privately initiated proposal.
This includes a feasibility assessment from a legal, technical, social, environmental, and financial perspective.
If, following the evaluation process, it is determined that the project passes the feasibility assessment, including concerns about affordability, value for money, and alignment with the public interest, the KAA, with the assistance of the PPP Directorate, can proceed to negotiate directly with Adani Holdings to conclude the relevant project agreements, subject to obtaining the relevant approvals.
If, however, the results of the evaluation reveal, for instance, that there are equally competent alternative developers in the market that could deliver higher value for money to the government, the PPP law gives the agency the option of subjecting the project to an open competitive tender.
The constitutional requirement for public participation has also been included in the PPP law, and contracting authorities are required to ensure public participation in PPP projects.
The KAA confirmed that there would be stakeholder engagement before finalising any agreement for the project.
The High Court recently set standards, which it termed the bare minimum requirements for public participation.
This includes the requirement for sensitisation of the public about the proposed project, adequate notice should be given to the public to provide comments, and there should be transparency and integrity in the process.
This is intended to ensure that public participation is fit for purpose and is not merely a public relations act.
The writer is a PPP Legal Expert.
