Kenya’s Partnership with Adani Group: A Double-Edged Sword?

NAIROBI, Kenya – In a surprising twist, Adani Group, notorious for its polarizing global reputation, has received the green light for a substantial energy transmission initiative through its offshoot, Adani Energy Solutions Limited (AESL). This $900 million project is framed within the Private-Public Partnership (PPP) model, stirring anxieties that Kenya might be inviting not just foreign capital but potential complications.

The sanctioning of this power transmission venture arrives on the heels of fervent public discourse surrounding another contentious arrangement tied to the Adani Group. In a bold move, Adani Enterprises launched Airports Infrastructure PLC (AIP) to assume management control over Jomo Kenyatta International Airport, despite significant pushback from transport workers opposed to this takeover.

Nonetheless, within the energy realm, documentation obtained by JH_EA indicates that the green light was granted following what the PPP Committee termed a “comprehensive evaluation and financial risk analysis,” coupled with “prolonged negotiations” between Kenya Electricity Transmission Company Limited (KETRACO) and AESL.

The Kenya Kwanza administration has voiced dissatisfaction regarding tight budget constraints, asserting that these financial shackles have impeded their ambitious development roadmap, with numerous electoral pledges left unfulfilled two years into their leadership.

Recently, President Ruto encountered significant hurdles when the contentious Finance Bill of 2024, aimed at raising taxes, was rejected following widespread protests. A court ruling on July 31, which deemed the 2023 Finance Act unconstitutional, only compounded these challenges. Consequently, the Ruto administration has ramped up its reliance on the private sector to spearhead flagship projects and cement his legacy.

Projects slated for execution by private entities span various sectors including transportation, housing, renewable energy, healthcare, water systems, information technology, and industrial parks, among others. Insights from the Public-Private Partnership Directorate at the National Treasury indicate that certain initiatives are poised for contracting, while others remain pending feasibility assessments.

The Indian Adani Group is set to helm a variety of significant infrastructure projects, prominently including developments in aviation and energy. This encompasses the operation of the 35 MW Menengai geothermal power plant for a quarter of a century. Their portfolio also features plans for critical power transmission lines and substations: the expansive 177 km 400kV Loosuk-Lessos line and the 64 km 220kV Kisumu-Musaga line, alongside new substations in Loosuk, Kakamega, Lessos, Musaga, and Kibos.

Moreover, Adani Energy Limited’s ambitious plans will manifest in the construction of a 206 km 400kV Gilgil-Thika-Malaa-Konza line and a 96 km 220kV Rongai-Keringet-Chemosit line, among several others, along with essential substations at Lessos, Rongai, and Thurdibuoro.

In its latest draft Budget Policy Statement, the Treasury outlined that the project feasibility study received the green light in May 2024, paving the way for contract discussions.

This energy transmission initiative was approved after a series of extensive negotiations from July to August 2024, as revealed in documents we possess. The PPP Committee’s technical documentation illustrates the deal’s terms, including a notable reduction in project costs. Initially estimated at Sh 132.13 billion (around $897 million), the new budget has been revised down to Sh 108.46 billion (approximately $736 million), representing a 17.9% decrease.

This revised figure closely aligns with the Public Sector Comparator’s estimate of Sh 108 billion (about $732 million). Importantly, the updated tariff, inclusive of taxes, fell from Sh 30,000 (around $204) to Sh 14,000 (about $97), according to the document.

While these strides are heralded as revolutionary for Kenya’s energy framework—promising heightened power reliability and economic progress—the populace is cautiously optimistic. Many citizens weigh the possible benefits of this international partnership against the significant risks, particularly given the Adani Group’s contentious standing marred by environmental controversies, financial discrepancies, and labor rights violations.

PHOTO: Gautam Adani, Chairman of the Adani Group. Image sourced from NMG.

In the local landscape, these allegations fuel skepticism concerning the transparency and financial governance of the Adani-KETRACO collaboration. Detractors assert the need for Kenyan authorities to tread carefully concerning potential financial pitfalls, especially when embracing robust infrastructure initiatives requiring monumental public funding and commitments over time.

The record of the Adani Group on environmental and human rights fronts has long colored public perception. In India, the conglomerate faces accusations of environmental degradation, particularly linked to its coal mining endeavors. Activists argue that Adani’s ventures have fostered deforestation, dislocation of indigenous populations, and substantial ecological devastation. Such worries resonate deeply with Kenyan environmentalists and human rights advocates, who fear that, without stringent safeguards, Kenya might experience similar repercussions.

Moreover, the Adani Group’s labor practices have attracted criticism, with reports detailing subpar working environments, insufficient safety regulations, and violations of workers’ rights at various facilities. This has prompted Kenyan labor unions and social justice entities to express unease regarding worker treatment in the AESL projects. They argue for the necessity of stringent labor safeguards to prevent any exploitation of Kenyans engaged in these initiatives.

Concerns about Adani’s integrity resurface through the voice of Nelson Amenya, a whistleblower regarding the conglomerate’s intentions for Kenya’s airports. “Adani’s notorious history of corruption, environmental degradation, and human rights abuses raises a significant red flag for Kenya. This company has a tendency to prioritize profit above community welfare, ecological health, and legal compliance. Caution is paramount as Kenya considers collaborating with such an entity,” cautions Amenya.

Amenya, pursuing a Master’s degree at HEC Paris, also co-founded Afrinet Carbon, which is dedicated to developing carbon offset projects across Africa.

Allegations of cronyism haunt the Adani Group, particularly concerning its ties to Indian Prime Minister Narendra Modi, prompting fears of similar entanglements in Kenya. Critics contend that Adani’s proximity to favorable policies raises alarms about potential conflicts of interest, stifling competition, and compromising public welfare in the energy sector.

Concerns loom large over the impact of Adani’s ventures on local populations. In India, the group faces criticism for displacing communities and disrupting livelihoods in rural settings. Given this global narrative, many Kenyans harbor similar fears that AESL projects could push communities out of their homes or hamper local economies, particularly if land acquisition and compensation processes lack transparency and fairness.

In response to these pressing issues, the Adani Group consistently denies any misconduct, touting its commitment to sustainable practices, environmental stewardship, and corporate social responsibility. The conglomerate highlights its renewable energy investments as indicators of its positive impact on communities it engages with.

Nonetheless, for many Kenyan skeptics, these reassurances lack substantive weight. They advocate for heightened scrutiny, transparency, and meaningful public participation in the decision-making processes concerning AESL projects.

Sarah Wesonga, a Programme Officer for Transparency and Access to Information at ARTICLE 19 Eastern Africa, emphasizes that Kenya’s lack of a singular public participation law does not negate its constitutional mandate under the 2010 Constitution. She points out the embedded nature of public involvement across various laws, including the Public Finance Management Act and the Environmental Management and Coordination Act.

“I’m not sure if anyone has sought access to information related to the agreement, including all supporting data, as this is public knowledge that should have been voluntarily disclosed,” Wesonga reflects, underscoring that legal precedents in Kenya affirm that public consultation should be meaningful, not merely a formality.

PHOTO: Adani Energy Solutions has announced its ambition to construct transmission lines and substations in Kenya, with an investment estimate of $900 million.

Wesonga also notes that while the Public-Private Partnership (PPP) Act incorporates provisions for public engagement, a comprehensive law covering governance in its entirety remains absent. Her observations underscore the growing calls for increased transparency.

Some critics argue it may be prudent for the Kenyan government to rethink its alliance with Adani or, at the very least, to impose rigorous oversight protocols to safeguard public interests.

As the Adani Group pushes ahead with these large-scale infrastructure undertakings, diverse voices from social media and human rights organizations alike raise alarms. They urge the government to prioritize public welfare, ensuring no compromises are made.

Advocates stress that without enhanced oversight and transparency, the potential drawbacks of these partnerships may outweigh any offered benefits. They believe instituting these measures is critical for protecting citizens and ensuring that the projects foster genuine progress for the nation.