Wiper leader Kalonzo Musyoka insists the proposal to have the Adani Group run JKIA allows Indian tycoon Adani control all airport cash flows, which is highly unusual. Normally, PPP deals restrict operators to cash flows from new developments, not existing assets. This risks Kenyans losing significant revenue from the ongoing operations of the airport.
The deal would have Adani fund renovations using revenue from existing operations, instead of having Kenya Airports Authority fund the improvements. This blurs financial responsibility and increases complications in revenue sharing, undermining fair risk allocation.
Adani’s contract guarantees them an 18% internal rate of return, which is fixed. This setup benefits Adani while imposing unpredictable risks on Kenya, especially since the Kenyan government would bear the fluctuations in revenue.
The proposed fee structure suggests that the charges for airlines using the airport could be excessively high, making Kenya’s airport less competitive compared to others in Africa. Adani’s financial model bases these charges on their guaranteed return, not on market realities.
Adani’s plan assumes steady passenger growth and full airport capacity over the next 30 years. These assumptions are unrealistic, given the airport’s historical performance and global aviation trends. Over-optimistic forecasts can lead to financial instability if passenger numbers do not meet expectations.
The proposal includes a request for a tax holiday for Adani, which could further distort financials. Kenyan policy allows tax holidays to encourage investment in less attractive sectors, but the airport business does not meet these criteria, potentially depriving the country of needed tax revenues.
Adani’s plan includes development of additional facilities on land potentially provided by Kenya Airports Authority. This raises concerns about the opportunity cost of the land and whether the KAA should be involved in land acquisition, rather than focusing on critical airport operations.
The absence of an open tender process for the deal undermines transparency. Without competition, there’s a risk of overpaying for the project, as there are no market-driven forces to ensure cost efficiency, and the public may lack confidence in the deal’s fairness.
