My take on the Jomo Kenyatta International Airport (JKIA) concession saga. So far, more heat than light. The government acts like it still doesn’t understand that more disclosure is how you overcome public distrust.
On the positive side, the contracting authority, the Kenya Airports Authority (KAA) has circulated a Privately Initiated Proposal by the Adani Group from India. The distributed version is dated March 2024.
I have also read through the voluminous feasibility study submitted to KAA by Adani. I had a long conversation with a source from KAA in the PPP Directorate at the National Treasury. I also visited the PPP Directorate office where I had a long talk on the subject with the Director General, Christopher Kirigua.
It seems to me that the level of public distrust has reached such a high level that we are not even willing to accept the irrefutable and basic fact that no concession contract has been signed so far. The proposal by the Indians has not gone through all the stages of approval.
The PPP Act provides for a lengthy approval process for Privately Initiated Proposals (PIPs). In fact, the PIP agreement does not even create a legal obligation on the part of the government.
And, there is an inter-ministerial PPP committee that has to approve the proposal by Adani after KAA has six months from the date of the approval to complete the development project phase.
The law obliges the government to appoint an independent consultant to manage the implementation of the project agreement.
Tuesday July 30, the Prime Minister’s Cabinet Secretary, Musalia Mudavadi was forced by the fight against the project to issue a public statement in which he stated that no deal had been signed and the proposal still had to be brought to Parliament for approval. .
I think that the debate about this project should now shift to discussing the discussion about the development stage. Shouldn’t we be discussing concession fees? Do we want to pay an annual concession fee or a revenue sharing mechanism?
What is the minimum investment level we should set for Indian investors? What is the fate of existing KAA personnel and should there not be a limit on the number of people who can be fired or reduced?
If Indian investors will build the terminal and runway, who will be responsible for the design specifications? This is an important issue because the airport is a national symbol and therefore the public may want to participate in the architecture.
I have heard a proposal that we should negotiate an arrangement where we only allow for Indian investors airside activities and operate land side activities- airport parking, airport tax collection for KAA. Is such an arrangement possible?
In new airport concession projects in other countries, the exclusivity of the issue tends to generate controversy.
Will the government deliver on the promise in the agreement to ensure that another airport is not built in certain geographical areas?
Bottom line: The public discussion of this concession project must now go beyond the scandal to discuss its merits and demerits.
Some of my sources close to the talks with the Indians have whispered to me that one of the contentious issues is whether Indians should be allowed to pick and choose Engineering, Procurement, and Construction (EPC) contractors. competitive bidding or government involvement.
Apparently, some difficult negotiators on the part of the government insist on an arrangement where the government becomes fully involved in the selection of EPC contractors brought to build runways, terminals and real estate and that they must be procured together and competitively.
The government now says it has learned from recent experience that some of the infrastructure concessions it has tried to propose are high consumer prices and toll charges because the EPC contractors building the projects are being sold uncompetitively.
An example cited in this regard is the failed plan to concession the Rironi-Nakuru-to-Mau Summit road to the French Group, Vinci, under a PPP deal. Apparently, French investors have proposed road tolls that the government deems unaffordable.
“The EPC cost on the toll road project is simply outrageous,” one of my sources argued during a conversation.
However, we must oppose the JKIA PPP deal to be too rigid because very powerful interests have interests in profitable concessions in business at the airport, including services such as ground handling, duty-free shops, aircraft technical services, advertising billing boards, and catering services in plane.
If the deal goes through, some existing contracts entered into with some vendors may be terminated, varied, or modified as part of the transition process.
