Kenya turns to development banks for financing the expansion of its airport, abandoning the partnership with Adani group.
Kenya is moving forward with a $2 billion expansion of its main airport in Nairobi, the Jomo Kenyatta International Airport (JKIA), after abandoning a public-private partnership with India's Adani Group due to legal controversies.
The government will finance the construction of the new runway and terminal building, with the potential to concession the airport later. This approach contrasts with the previously canceled deal, which involved a 30-year operating lease for the Adani Group [1].
The expansion aims to increase JKIA's capacity, boosting its status as East Africa's premier aviation hub and strengthening Kenya's position as a top tourism destination. Once funding is secured from lenders like the African Development Bank (AfDB) and China Export-Import Bank (China Exim), the government will select contractors to execute the works [1].
This development is part of Kenya's broader aviation infrastructure efforts to meet growing demand and regional competition. The government has committed to transparency and meeting strict implementation timelines [2].
The cancellation of the Adani partnership was prompted by allegations of bribery involving the group’s executives. These allegations led Kenya to pursue alternative financing from reputable international development lenders [1].
In a separate development, the Kenyan government will securitise a portion of the fuel levy it charges motorists for a bond issue to fund road construction. The securitised bond will be split into two halves for both a local and an offshore listing, but it is currently undecided in which foreign market the offshore portion will be sold [3].
The airport expansion is one of the infrastructure projects that Kenya is seeking new ways to finance, given the rising debt. The Transport Minister, Davis Chirchir, announced that Kenya will issue a securitised bond for 175 billion shillings ($1.36 billion) for road construction, and the bond will be issued locally and abroad next month [4].
The Transport Minister also stated that once the funds for the airport expansion are secured, the government will look for a contractor to carry out the work. The Adani Group, however, has rejected these allegations as "baseless" and is cooperating with legal processes [5].
References:
- Nairobi Airport Expansion: Kenya Drops Adani Group Deal
- Kenya Committed to Aviation Infrastructure Development
- Kenya to Sell Securitised Bond for Road Construction
- Kenya to Sell $1.36 Billion Bond for Road Construction
- Adani Group Rejects Allegations in Cancelled Kenya Airport Deal
- In contrast to the previous 30-year operating lease agreement with the Adani Group, the Kenyan government will finance the airport expansion, aiming to use concession later.
- The government's decision to secure funding from the African Development Bank and China Export-Import Bank for the airport expansion aligns with their commitment to transparency, while avoiding the controversies associated with the cancelled sports-related deal.
- Parallel to the airport expansion, the Kenyan government is planning to fund road construction by issuing a securitised bond, splitting it into local and offshore listings, and seeking ways to finance other infrastructure projects amid rising debt concerns in finance and sports sectors.
