In 2019, I penned a Business Daily opinion titled “Why KQ/KAA deal is not convincing.”
A near bankrupt Kenya Airways (KQ) was to take over Kenya Airports Authority (KAA) assets and operations with the intention of using the authority’s cashflows to fund national carrier’s revival and growth.
The proposal failed to explain the benefits of the deal to Kenya, and how to ringfence ownership of a critical strategic public asset.
Similarly, what is not coming out clearly in the proposed deal to offload the Jomo Kenyatta International Airport (JKIA) assets to the Adani group for 30 years is the overriding justification.
Is it a financing challenge or airport management inadequacy that we are seeking to address? And why the urgency to do it now?
After the 2013 JKIA fire, the Jubilee government undertook significant airport modernisation and expansion, adding much value to an infrastructure which was originally constructed and commissioned by Jomo Kenyatta government in 1978.
Project modernisation by Jubilee may be part of debts that we continue to pay, but the consolation is that JKIA remains a public asset that will serve current and future generations. Will an Adani deal take over the debt costs for this project?
My understanding is that a new runway is a major pending project at JKIA, of which I recall had a contract awarded and then cancelled.
If indeed funding the runway is the key challenge, can the government delay the project until there is capacity to fund it. There is no compelling urgency to do everything now.
The additional runaway, I believe, can on its own merit attract funding from multilateral lenders due to its strategic value addition.
Yes, issues of leaking roofs and back-up power failures are management issues caused by lax preventive maintenance. Expert airport management can indeed be sourced locally or from outside.
Specifically, the Board of KAA has to be fit for the purpose and challenge.
We are familiar with straightforward greenfield public-private partnership projects like the Nairobi Expressway where investors constructed new infrastructure from scratch using own capital, and recoup costs and returns from the investment.
There is also the ongoing development of a grassroots Kigali Airport owned by Qatar Airways (60 percent) and Rwanda government. Qatar Airways is fully owned by the Qatar government, ensuring sovereign guarantee for the project.
Turning over ownership of existing JKIA assets to a foreign private company without any sovereign guarantees is a major risk to Kenya. Further, it is morally unfair to the Kenyan taxpayers who have funded the existing assets.
