India’s Adani Group foray into regional logistics raises controversy

August 19, 2024 in Business, Companies, Infrastructure by Editor

In the reported $2.5 billion deal first mooted towards the end of July, Adani Airport Holdings Limited is offering a public-private partnership (PPP) to revamp the aging JKIA which opened for operations in 1978.

Adani Group, the Indian conglomerate dogged by controversy, is making a second major foray into East Africa’s logistics industry by making a bid to lease Jomo Kenyatta International Airport (JKIA). This comes soon after securing a 30-year concession from the Tanzania Ports Authority to operate one of the container terminals at Dar es Salaam port.

In a joint venture with Abu Dhabi Ports, the concession attracted significant public scrutiny and criticism due to the lack of transparency. Known as East Africa Gateway, the joint venture will see Adani Ports and Special Economic Zone (APSEZ) working together with Abu Dhabi Ports to operate Container Terminal 2 (CT2). The attraction for both is future growth in throughput traffic serving the region’s landlocked countries, including Uganda.

Since early last year, Adani Group with reported revenues of $37 billion in 2023 has been warding off accusations of financial irregularities including alleged stock manipulation and fraud in a campaign led by Hindenburg Research, a US-based investment research firm. Gautam Adani, the billionaire major shareholder of the Group and close confidante of Prime Minister Narendra Modi, has denied all these allegations however his business empire continues to arouse attention.

With no prior advertised RFP or other tender invitation, the Kenya Airports Authority (KAA) is under pressure to provide more transparency on the Adani deal even as airport workers threaten to strike. Their concerns have been heightened by reports that with the backing of the Kenya government, a tentative agreement between the two parties is already in place.

Apart from laying out a second runway, AAHL propose to construct a new passenger terminal and other rehabilitation works. The most recent addition in JKIA capacity was Terminal 1A completed in 2014 however plans to add another in a Greenfield Project fell through. For the past five years, KAA has been stressing the need for a second runway to ensure JKIA maintains its position as a regional aviation hub, but inadequate resources have severely limited these ambitions.

For the KAA management, the stakes have grown higher, knowing Rwanda is fast developing its Bugesera International Airport while Ethiopian Airlines fully backing construction of a new airport to complement operations at Addis Ababa Bole International Airport.

Henry Ogoye, the acting KAA managing director said in a statement to confirm the Adanic Group interest, “The Project Agreement will be preceded by Stakeholder Engagement, National Treasury approval, the Attorney General clearance and Cabinet approval. The attendant investment requirement is significant and cannot be funded with the prevailing fiscal constraints without recourse to private funding.”

The Kenya Aviation Workers Union (KAWU) are opposed to the PPP fearing that it could lead to significant job losses and the employment of foreign workers. Moss Ndiema, the KAWU secretary general, has publicly said, “It’s a deal tainted with corruption.”