The volatility in JKIA-Adani deal; what do Kenya’s neighbours have?

They also demanded for the resignation of the entire KAA Board of Directors within the specified strike notice period. The union targeted specific KAA managers who they claimed were involved in the “unlawful” Adani Airport Holding Limited (AAHL) deal apart from other acts of impunity.

The Aviation Workers’ Union, led by Moses Ndiema, said they will only come to the table once the Adani Airport Holdings Limited deal has been completely abandoned, rendered null and void.  

The union boss, Mr. Ndiema said "You do that for us we are willing to sit down and discuss anything else. If you do not in the next seven days we are marshaling everyone in aviation.”

The action by the aviation industry labour union, was as a result of the Adani Private Investment Proposal (PIP) that became public on July 11. On July 28, following the heat created by the Gen-Z protests, President Ruto, out on a tour in Mombasa, confirmed that JKIA could be leased out under the Public Private Partnership (PPP) model and assured Kenyans that “the airport would not be sold.” 

The President’s plea in Mombasa was, "I want to persuade you Kenyans, don't buy into fake news, don’t buy into the propaganda.” But already the truth was out there.

A deal well-received by government

In February, when a Spanish consulting firm ALG concluded a feasibility study for the JKIA PPP project, it recommended using a “competitive bidding procedure” to “maximize the value-for-money for the Contracting Authority.” 

However, what followed was a disregard of expert advice. It remains unclear why or how a privately-initiated proposal (PIP) arrived on the government’s table and ended up becoming a viable consideration for JKIA’s expansion and management project. This is while other regional airport construction projects have become the pet comparison projects despite the stark contrast they represent in light of the JKIA PIP. 

It is of interest also that in its proposal to the Government of Kenya, Adani argued that a PIP “offers distinct advantages over competitive bidding. Adani, in its proposal, claimed that a PIP creates a win-win scenario for the people of Kenya, the GOK, and private investors.” 

In its proposal, improvements made to JKIA would be financed by revenue from the airport from increased airport fees from airlines and other users, money raised from managing existing airport facilities and also revenue from increased fees from JKIA tenants. Adani would also partly use the accruing revenue from JKIA to develop more facilities on the property, which would be transferred to it at the end of 30 years for an eighteen percent equity stake in JKIA. Talk of a win-win situation…

The Adani background

Adani Airport Holding Limited describes itself as an airport infrastructure company established in India. It is part of the Adani Group, which is the largest infrastructure platform in India with interests in world class assets across infrastructure and utilities, material, and metals, and emerging tech businesses. 

The Adani Group has interests in sectors such as manufacture of weapons, energy, airport management, and agribusiness.  As part of the Adani Group, Adani Airports Holdings Limited (AAHL) says it follows a repeatable robust and proven transformative model of investment. However, the Adani Group has been dogged by scandals including stock manipulation, accounting irregularities, political corruption, cronyism, tax evasion, environmental damage, and suing journalists, all of which, it vehemently denies. 

Ruto defending JKIA PPP

On 28th July, following the heat created by the Gen-Z protests, President Ruto laboured to explain to his audience that “leasing JKIA out to investors who can work with the government to expand the airport and ensure it serves Kenyans better under the Public-Private Partnership (PPP) would be welcome.” 

"Let's be honest Kenyans, the airport we have in Nairobi is made of canvas. This is a temporary structure we built almost 7 years ago. Ethiopia have a brand new airport. Rwanda the same. It is the reason why we need to work with investors to have a new airport in Nairobi," Ruto said.

If a comparison would be drawn between JKIA’s proposed refurbishment/ expansion and the new airports in Rwanda and Ethiopia, then the President’s words that Rwanda and Ethiopia have brand new airports are largely true. 

However, reading the PIP on JKIA submitted by the Adani subsidiary, the difference between the new Bugesera International Airport in Rwanda and Ethiopia’s newly refurbished Bole International Airport and the upcoming Bishoftu International Airport is as stark as night and day. 

Rwanda’s Bugesera Airport

Around 25 kilometers southeast of Kigali City in Rwanda, within Bugesera District, lies the USD 818 million Bugesera International Airport, a new airport project in landlocked Rwanda. According to CAPA, the Centre for Aviation, the total construction is expected to be complete by December 2028 and will include a 4200m runway, cargo terminal and passenger terminal. 

Bugesera International Airport is a completely new facility being built away from the existing Kigali International Airport whose capacity is a meagre 1 million passengers annually. 

The old airport is set to remain operational for special arrivals, chartered flights, and host a pilot training school. Kigali International Airport is perched on top of a small hill and surrounded by human settlements rendering it ineligible for expansion.

The new facility at Bugesera will have a 130,000-square-meter main terminal building capable of accommodating 8 million passengers a year, a figure expected to rise to over 14 million in the following decades.  Details given by CAPA, the Centre for Aviation states that Qatar Airways will have a 60% ownership of the new airport. Qatar Airways will also acquire 49% of shares in the national flag carrier airline, Rwandair, expanding its access to over 65 locations around the world. 

Ethiopian Airports: Poised to lead in Africa

Ethiopian Airports says it has a plan to become the leading airport company in Africa by 2025 and Bole International is its flagship project. It has expanded Bole Airport from a floor area of 48,000 square meters up to 122, 000 square meters. Its passenger handling capacity is up from six million people per annum to around 22 million currently. At total completion, the Addis Ababa airport will have the capacity to handle up to 25 million passengers annually. 

The China Communications Construction Company (CCCC) is the contractor, while the French firm, ADPI, is project consultant. EXIM Bank of China has financed the project, the total cost of which is estimated at 500 million dollars.

Concurrent to the Bole International Airport project is the brand new international airport in the outskirts of Addis Ababa, at a location called Abu Sera in the town of Bishoftu at the outskirts of Addis Ababa. The new $5 billion airport project begins this year and will cover an area of 35 square km with a capacity to handle 100 million passengers a year. 

The CEO of Ethiopia Airports, Tewlde GebreMariam says the new airport location was chosen for its low elevation but has however, not said how the new Ethiopian airport, which, will accommodate 100 million passengers will be funded.

The regional comparison 

A quick comparison between JKIA, Bugesera International Airport in Rwanda, Bole International Airport and the upcoming Bishoftu International Airport in Ethiopia, immediately runs into many discrepancies. There is no mention of either Rwanda or Ethiopia handing over its airport for thirty years or more. 

Both countries are putting up brand new airports and in the case of Bole International airport in Ethiopia, it has completed an upgrade that has elevated its capacity be among the leading airports in Africa not just this region. 

None of these countries has handed over its airports to foreign firms to run them under a concession or manage them in any way even though Qatar Airways will own sixty percent of the facility in Rwanda. Secondly, the airports in Rwanda and Ethiopia have clearly stated the amounts being used on the projects and the financiers funding the facilities construction as opposed to Kenya’s which is still in gray. If anything, JKIA will wait upon the concessionaire to collect revenue from Nairobi to execute certain upgrades on the Nairobi airport while the Rwandese and Ethiopian authorities cannot wait to start running their new airports. In Kenya’s case, KAA will set up a kitty to pay off the concessionaire in case Kenya changes its mind and drops the contract; but what happens if Adani jumps ship after five years of managing JKIA and pocketing revenues yet failing to put up any new meaningful facility?

The labour workforce

In light of the afore-going, JKIA will need to run its own race, at its own pace and on its own course without necessarily looking for discordant comparisons with other airports in the region. JKIA’s management, the KAA, should focus on getting value for money. In case the PPP model is what will serve the country’s interests first and best, could prudence be our clarion call… Kenyans working for KAA at JKIA do not need to be at the behest and mercies of a concessionaire as he seeks for a free hand to increase airport charges but at the same time re-hire workers at unknown and unspecified terms. 

In this day and age, does the concessionaire need to engage foreign employees at JKIA? Lastly why tie down the sovereign people of Kenya from building another airport that could rival JKIA for thirty years? 

Kenya is still smarting from the cancelled Greenfields tender that was to realize the second terminal at JKIA but the Jubilee Government cancelled the tender in 2016 after an initial Ksh.4.2B had been paid to the contractor and State is set to pay an extra Ksh.4.7B to two Chinese contractors as part of an-out-of-court-settlement for the cancellation of the same contract. It has never been known why the government cancelled this contract after spending a whopping Ksh.70M for the presidential groundbreaking ceremony.

Kenya Government’s Achilles heel has turned out to be either the poor or lack of legal advice over its multi-billion projects some of which have bled the country dry. The immediate past Attorney General, as the custodian of government’s lawfulness cried wolf recently when the courts of law found fault with laws that had been drafted and enacted. He said he had not been consulted. 

The incoming Attorney General should be fully engaged in ensuring that each law and contract such as the Adani PIP meet the threshold of our legal system and she protect the public from undue exposure as a result of poor or skewed contracts.