Kenya’s National Treasury is actively seeking alternative public-private partnership (PPP) models to finance its major infrastructure projects, following the cancellation of contracts involving the Adani Group. The projects in question, including the modernisation of Jomo Kenyatta International Airport (JKIA) and the Kenya Electricity Transmission Company (KETRACO), are critical to the country’s development goals, but the government has acknowledged that the current fiscal position makes it impractical to fund such initiatives solely through the national budget.
Dr. Chris Kiptoo, the Principal Secretary for the State Department of the National Treasury, presented this situation during a session with the National Assembly’s Public Accounts Committee (PAC) on December 2, 2024. He outlined the urgent need for partners in financing significant infrastructure upgrades, including the much-needed expansion of JKIA, which serves as East Africa’s primary aviation hub. Kiptoo explained that while JKIA was designed in 1978 to handle 5 to 7 million passengers annually, the airport is now accommodating over 10 million passengers, putting considerable strain on its facilities.
“This airport is under pressure,” Kiptoo stated, emphasizing that the current infrastructure is inadequate to meet the growing demand. “The only way to finance the upgrade is through a public-private partnership, as the national budget cannot bear the full cost.”
The search for alternative partners comes in the wake of the cancellation of the deal with the Adani Group, a business conglomerate led by Indian billionaire Gautam Adani. President William Ruto’s administration decided to terminate the partnership after Adani was indicted for fraud by U.S. prosecutors. The fallout from this decision has left the government in search of new options to continue the modernization efforts without overwhelming taxpayers.
The cancellation has led to debates on the role of PPPs in Kenya’s infrastructure projects. While these models are seen as a potential solution to bridge the country’s infrastructure gap, there are concerns about their suitability for all types of projects. Funyula MP Wilberforce Oundo voiced support for PPPs, highlighting the successful completion of the Nairobi Expressway as an example of how such partnerships can drive significant infrastructure development. However, Oundo also raised concerns that projects of the scale of JKIA’s modernisation might face unique challenges that could make them unsuitable for the traditional PPP model, particularly in light of recent issues with the Adani deal.
“The PPP model is essential given the limited fiscal space we currently face. But some projects, like JKIA’s modernisation, could be more complex and require a tailored approach,” Oundo said. His remarks underscore the need for careful consideration when choosing which projects should be financed through PPPs.
Bura MP Yakub Adow also weighed in, stressing the importance of transparency and public engagement in PPPs. He warned that any new partnership must involve thorough public consultation to ensure legitimacy and broad acceptance. Adow noted that one of the major issues with the Adani Group’s proposal was the perceived lack of transparency, which led to public distrust.
“The government must ensure there is public participation in these projects. If the public feels left out or uninformed, it could jeopardize the success of these projects,” Adow said. His concerns highlight the critical need for clear communication and transparency to avoid repeating the mistakes of the past.
Despite these concerns, the National Treasury is focused on finding the right partners to help drive Kenya’s infrastructure ambitions forward. With the fiscal challenges facing the country, including a strained tax regime and ballooning national debt, PPPs may represent the only viable path to financing key projects. The Treasury’s continued exploration of such partnerships will be crucial in determining how Kenya navigates its infrastructure future while ensuring the sustainability of its public finances.
In conclusion, the cancellation of the Adani partnership has presented Kenya with an opportunity to reassess its approach to financing major infrastructure projects. The National Treasury is now tasked with finding credible and transparent partners who can help modernise critical infrastructure like JKIA, with the goal of ensuring sustainable development while balancing the fiscal realities facing the country. The success of these partnerships will depend not only on the financial backing they provide but also on their ability to engage the public and maintain trust.
