Inside Adani’s Ksh.95 billion, 30-year deal for Kenya’s power lines

After four months of negotiations, the Kenyan government last week signed a Ksh.95 billion ($736 million) power transmission deal with Adani Energy Solutions – an Adani Group subsidiary – to develop and maintain key transmission lines and substations across the country.

Adani will manage the transmission lines and substations it will construct for 30 years, after which the project and all its assets will be handed over to the Kenya Electricity Transmission Company Limited (KETRACO) “in good condition and free of any encumbrances.”

Citizen Digital has established that the Indian company will pay the government a Ksh.1 billion ($8 million) success fee under the deal.

A success fee is a compensation paid to an advisor, often an investment bank, for successfully closing a deal.

Details of the Public-private Partnership agreement (PPP) shared by KETRACO show Adani Energy Solutions agreed to pay the Kenyan government a success fee of one per cent of the total project’s cost.

In the build-own-operate-transfer arrangement, Adani plans to develop the 400-kilovolt Gilgil through Thika and Malaa to Konza transmission line to stretch 208.73 kilometres and have new substations in Gilgil, Thika, and Malaa.

The second 220-kilovolt line from Rongai to Keringet and Chemosit will cover 99.98 kilometres, with new substations at Rongai, Keringet, and Chemosit.

A third 132-kilovolt transmission line will be constructed from Menengai through Ol Kalou to Rumuruti and extend for 89.89 kilometres. A new substation will be constructed at the line.

The Indian firm also plans to set up a 132/33kilovolt substation at Thurdibuoro in Kisumu County.

According to KETRACO, Adani will complete the projects within 24 months from the date of the project agreement.

“Failure to complete the projects on time, KETRACO will either enforce the performance security or terminate the agreement,” the state parastatal says.

The company is expected to fund the project from debt and equity at a 70:30 ratio. Per Energy Cabinet Secretary Opiyo Wandayi, the Kenyan government will not incur any financial costs related to this project.

Additionally, Adani is required to maintain a competitive bidding process that ensures business opportunities for Kenyans.

KETRACO says an ‘independent expert’ will be jointly appointed to monitor and manage the project’s implementation.

“KETRACO will set up a project implementation team that will work together with the [independent expert] and other state actors to ensure successful implementation of the project,” reads the terms of the agreement.

Further, in the event of any refinancing by Adani Energy Solutions from improved market conditions, KETRACO and Adani shall share the resultant refinancing 50:50.

Per the Energy Ministry, the project is meant to address Kenya’s recent spate of power blackouts, which have been blamed on ageing transmission lines.

KETRACO says everyone affected by the project will be compensated for the loss of their assets, including any damage to crops and trees.

“They will also be compensated at market value for limited loss of use of land for the parcels that will be affected by the transmission lines,” the parastatal says.

“Compensation shall be full, prompt and just, with all persons displaced by the project being fully resettled.”

And despite concerns over how public participation in the deal was conducted after Adani Energy Solutions submitted a privately initiated proposal, the government holds that it conducted comprehensive due diligence.

Adani Energy Solutions’s sister company, Adani Airport Holdings, is involved in a controversial $1.85 billion (about Ksh.239 billion) proposed investment deal with the Kenyan government to expand the Jomo Kenyatta International Airport (JKIA) in Nairobi.

The court has halted all further action on the proposed lease of JKIA to Adani until a case lodged by the Kenya Human Rights Commission (KHRC) and the Law Society of Kenya (LSK) on September 9 blocking the deal is resolved. 

At present, Adani Energy Solutions is negotiating another $900 million (about Ksh.116 billion) deal to upgrade Tanzania’s electricity transmission line.

A top government official familiar with the matter told Bloomberg last week the Indian firm seeks to construct high-voltage power lines through a similar public-private partnership deal with Kenya’s southern neighbour.