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The Adani Group was set to invest $736m to construct power lines
Kenya will no longer consider the bids for two major contracts – one for the construction of power lines – from a company owned by India’s second wealthiest man who is now wanted by the US for alleged fraud tied to solar energy contracts.
On Thursday (21 November), Kenya’s President William Ruto cancelled the deals-in-the-making involving Indian billionaire Gautam Adani, after he was indicted for fraud by US prosecutors 24 hours earlier.
The Adani Group was set to invest $1.85 billion in Kenya’s main airport in exchange for a contract to run it for 30 years, as well as a $736m deal with the energy ministry to construct power lines.
Before Ruto had pulled the plug on the contracts, the Adani proposal for the power lines included the construction of 206km 400kV Gilgil-Thika-Malaa -Konza, 400/220/132 kV substation at Rongai and 95km 220kV Rongai-Keringet-Chemosit line was at the Draft Project Agreement stage.
This included, among others, approval of projects and financial risk assessment report prepared by a negotiating team, clearance of the draft project agreement by the Attorney-General and notification of award to the Cabinet by the contracting authority.
Charged by US prosecutors
On Wednesday 20 November, Adani was charged with fraud by US prosecutors for allegedly orchestrating a $250m bribery scheme linked to major solar energy contracts and concealing it to raise money in the US.
The Adani Group has denied the allegations, describing them as “baseless.”
The US Department of Justice (DOJ) said in a press statement on Wednesday that a five-count criminal indictment was unsealed in federal court in Brooklyn charging Gautam S Adani, Sagar R Adani and Vneet S Jaain, executives of an Indian renewable-energy company (the Indian Energy Company), “with conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from US investors and global financial institutions on the basis of false and misleading statements.”
“As alleged in the indictment, between approximately 2020 and 2024, the defendants agreed to pay more than $250 million in bribes to Indian government officials to obtain lucrative solar energy supply contracts with the Indian government, which were projected to generate more than $2 billion in profits after tax over an approximately 20-year period (the Bribery Scheme),” said the DOJ.
Deputy Assistant Attorney-General Lisa Miller said the offences were allegedly committed by senior executives and directors to obtain and finance massive state energy supply contracts through corruption and fraud at the expense of US investors.
President Ruto cancels Adani
In his state-of-the-nation address on Thursday, Ruto said the deals had been cancelled based on “new information provided by investigative agencies and partner nations.”
“In the face of undisputed evidence or credible information on corruption, I will not hesitate to take decisive action,” said Ruto.
Under the airport proposal, the upgrades would involve a new runway and an improved passenger terminal at the Jomo Kenyatta International Airport.
In September, airport workers protested against the deal as they feared they would lose their jobs.
Ketraco explains the need for private investment
On Wednesday, in a press statement, the Kenya Electricity Transmission Company (Ketraco) confirmed that it had received Expressions of Interest (EoI) from two private companies, Africa50 and Adani Energy solutions Limited in 2018 and 2023 respectively.
The firms expressed interest in constructing high voltage power transmission lines – (237kms from Africa50 and 388kms from Adani).
The project proposals had been presented by the two companies as Privately-Initiated-Proposals (PIPs), an arrangement provided for under the PPP Act 2021 which allows the government to benefit from the knowledge and innovative ideas of the private sector, Ketraco MD John Mativo explained.
Deals had not yet been finalised – Ketraco
Ketraco said it had not signed any contracts/agreements with the mentioned private companies.
In explaining its decision to seek private investment, Ketraco said that Kenya is grappling with ageing transmission infrastructure and insufficient investment in power transmission.
“The investments in this sector have not been at the desired levels over the last few decades.
“The consequences over time have been frequent power blackouts that have taken a toll on the economy. As such, the country needs a stable transmission infrastructure that will ensure an optimal balance between energy generation, transmission and distribution.
“Ketraco is guided by its Transmission Master Plan that provides guidance on what needs to be done to get to the desired levels. Ketraco’s Transmission Master Plan 2023-2042 outlines the need for 5,672 km of new high-voltage lines.”
But in Ketraco’s Statement on the Growth of Power Transmission Infrastructure and the Public-Private-Partnership Financing Option document, it appeared that the public-private partnership deal with Adani had been closed. |
