Tensions flare as CS Mbadi clashes with Senators over Adani's JKIA proposal

The session, held by the Senate Departmental Committee on Transport Committee, devolved into a heated exchange, marked by accusations and walkouts from several senators.

The atmosphere turned chaotic as CS Mbadi attempted to address questions regarding the Adani deal.

Senators Richard Onyonka, Edwin Sifuna, and Samson Cherargei expressed their frustrations with Mbadi's responses, leading to a breakdown in decorum.

Senator Richard Onyonka and Samson Cherargei during a session of the Senate Committee on Roads, Transportation and Housing Senator Richard Onyonka and Samson Cherargei during a session of the Senate Committee on Roads, Transportation and Housing Pulse Live Kenya

Despite attempts by Committee Chair Karungo Wa Thangwa to restore order, the senators walked out in protest, claiming their time was being wasted and demanding respect for the legislative process.

Senator Onyonka presented new evidence suggesting that other companies had expressed interest in the JKIA takeover but were ignored by the Kenya Airports Authority (KAA).

He insisted that this information contradicted Mbadi's claims that only Adani had submitted a proposal.

This prompted a fierce back-and-forth, with Mbadi defending his position but becoming increasingly agitated as senators pressed him for clarity on the matter.

.The session saw notable exchanges where Senator Sifuna accused Mbadi of disrespecting the Senate and failing to provide satisfactory answers.

"John Mbadi must respect this house!" he exclaimed, emphasizing the need for accountability from government officials.

The tension escalated as both sides raised their voices, with Mbadi arguing that he was there to provide answers on matters of national importance.

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As the session progressed, it became clear that both sides were entrenched in their positions.

Senators demanded more transparency regarding the evaluation process of the Adani proposal and questioned Mbadi's handling of documents related to the deal.

CS Mbadi also told the committee that Adani Airport Holdings Limited submitted a Privately Initiated Proposal (PIP) to KAA in line with Section 40(1) of the PPP Act, 2021 and paid $50,000 appraisal fee as set in law.

National Treasury and Economic Planning CS John Mbadi during a session of the Senate Committee on Roads, Transportation and Housing National Treasury and Economic Planning CS John Mbadi during a session of the Senate Committee on Roads, Transportation and Housing Pulse Live Kenya

CS Mbadi explained that the State Department of Transport forwarded a letter to the National Treasury on March 1, 2024, requesting assessment and approval of the PIP in accordance with Section 40(4) of the PPP Act, 2021.

An Evaluation Committee with members from KAA and the National Treasury was established to review the proposal as per Section 42 of the PPP Act.

“The Evaluation Committee, in evaluating the proposal, applied the criteria specified in Section 42(3) of the PPP Act to scrutinize the proposal, i.e. public interest criteria, project feasibility criteria, PPP suitability criteria and affordability criteria.

"The Committee identified 22 issues in the PIP proposal and recommended that the issues be addressed by Adani Airport Holdings Limited at the Project Development Phase,” CS stated.

When asked about the approval of the PIP by the PPP Committee, CS Mbadi clarified that the Committee reviewed the evaluation report and allowed the project to move forward to the Project Development Phase under Section 43 of the PPP Act.

Additionally, both Adani and the KAA were tasked with addressing several concerns, including tax compliance, which would be verified by the Kenyan High Commission in India.

The first phase of the project, proposed for 2025-2029 needed to be shortened due to its urgency. The thirty-year concession period under the Build-Operate-Transfer (BOT) model was to be determined based on a detailed financial analysis.

Session of the Senate Committee on Roads, Transportation and Housing Session of the Senate Committee on Roads, Transportation and Housing Pulse Live Kenya

To facilitate this assessment, Adani was required to provide a financial model, detailed EPC cost estimates, O&M cost estimates and financing terms. The equity IRR of 18% proposed by Adani would also be subject to negotiation.

The CS emphasised that compensation for the value of the asset transferred at the end of the concession period would apply if Adani had not achieved its targeted return.

Aero and non-aeronautical charges would need to comply with relevant national and international laws including negotiations with third parties that have existing contracts with KAA.

He also highlighted the importance of aligning land acquisition or allocation with the JKIA Masterplan, subject to land availability and necessary approvals from bodies such as the KAA Board and the National Land Commission.

KAA was expected to provide Adani with details of land available for city-side development, which would be a key part of the feasibility study.

“The risk matrix should be reviewed including social risks and risks allocated appropriately, with the Proponent providing a proper mitigation plan. All commitments must be made in line with Kenyan laws, and any proposed amendments to the laws should follow established legislative processes,” the CS added.

Senator Edwin Sifuna during a session of the Senate Committee on Roads, Transportation and Housing Senator Edwin Sifuna during a session of the Senate Committee on Roads, Transportation and Housing Pulse Live Kenya

Regarding the Project Development Phase, CS Mbadi reported that KAA and Adani Airports had not yet entered into a Project Development Agreement under Section 43(7) of the PPP Act.

After receiving approval to proceed to the Project Development Phase, Adani conducted a feasibility study which was then submitted to KAA for review.

On April 4, 2024, the State Department of Transport forwarded the feasibility study to the PPP Directorate for consideration by the PPP Committee.

Furthermore, CS Mbadi informed the Committee that the PPP Directorate has not approved any stage of the PIP by Adani without the approval of the PPP Committee.