India’s Controversial Adani Group Secures Multibillion Power Project Amid Global Integrity Concerns

Nairobi, September 2024 – Despite Adani Group’s controversial global track record, its subsidiary, Adani Energy Solutions Limited (AESL), has secured approval for a multimillion-dollar energy transmission project in Kenya under the Private-Public Partnership (PPP) framework. This decision has sparked fears that Kenya might be opening its doors to more than just foreign investment.

The approval of Adani’s power transmission project comes amidst heated public debate over another deal involving the Adani Group. In a separate agreement, Adani Enterprises has formed a subsidiary, Airports Infrastructure PLC (AIP), in preparation for taking over the management of Jomo Kenyatta International Airport, despite ongoing opposition from transport workers against the takeover.

However, in the energy sector, documents seen by JH_EA reveal that the approval was granted after the PPP Committee conducted what it described as a “thorough evaluation and financial risk assessment,” along with “extensive negotiations” between Kenya Electricity Transmission Company Limited (KETRACO) and AESL.

The Kenya Kwanza government has expressed frustration over budget constraints, claiming these challenges have hindered their development plans, with significant election promises still unmet two years into their administration.

President Ruto recently faced major setbacks with the rejection of the controversial tax-raising Finance Bill of 2024, following nationwide protests and the July 31 court ruling that declared the 2023 Finance Act unconstitutional. In response, President Ruto’s administration has turned to the private sector to drive flagship projects and secure his legacy.

Among the projects to be undertaken by private players are those in transport and infrastructure, green energy, housing, healthcare, water, Information Technology, and industrial parks, among many others. Data from the Public-Private Partnership Directorate of the National Treasury reveals that some projects have reached the contracting stage, while others are still in the feasibility study phase.

India’s Adani Group will oversee several major infrastructure projects, including the the country’s aviation and the power sector among them the 35 MW Menengai geothermal power plant, which will be operated for 25 years. Their plans also encompass the development of critical power transmission lines and substations, such as the 177 km 400kV Loosuk-Lessos line, the 64 km 220kV Kisumu-Musaga line, and new substations at Loosuk, Kakamega, Lessos, Musaga, and Kibos.

In addition, Adani Energy Limited will construct a 206 km 400kV Gilgil-Thika-Malaa-Konza line, a 96 km 220kV Rongai-Keringet-Chemosit line, a 70 km 132kV Menengai-Olkalou-Rumuruti line, and several key substations, including those at Lessos, Rongai, and Thurdibuoro.

In a recent draft Budget Policy Statement, the Treasury disclosed that the project’s feasibility study had been completed and approved in May 2024, clearing the path for contract negotiations.

The project, involving the construction and management of transmission lines across Kenya, was approved after a series of negotiations held from July to August 2024, according to documents in our possession. The PPP Committee’s technical working paper outlines the terms of the agreement, including a substantial reduction in project costs. Initially estimated at Sh 132.13 billion (approximately USD 897.09 million), the project cost has been revised down to Sh 108.46 billion (approximately USD 736.51 million), reflecting a 17.9% reduction.

This adjustment aligns closely with the Public Sector Comparator’s cost estimate of Sh 108 billion (approximately USD 732.56 million).  As a result, the revised tariff, including taxes, has decreased from Sh 30,000 (about USD 204.43) to Sh 14,000 (about USD 96.81), the document reads in part.

While these developments are touted as transformative for Kenya’s energy sector, promising improved power reliability and economic growth through better infrastructure and international collaboration, many Kenyans are raising concerns. The potential benefits of this partnership are being weighed against the risks, particularly given the Adani Group’s global reputation, which is marred by allegations of environmental harm, financial irregularities, and labor rights violations.

The Adani Group, led by billionaire Gautam Adani, has faced global scrutiny over allegations of environmental degradation, financial misconduct, and labor rights violations. A recent report by Hindenburg Research accused the conglomerate of stock manipulation and accounting fraud, further fueling concerns about its governance and ethical practices. In 2023, the scandal involving Hindenburg Research led to a significant drop in the value of Adani stocks and raised serious questions about the company’s corporate governance.

In Kenya, these allegations continue to raise concerns about the transparency and financial integrity of the Adani-KETRACO partnership. Critics argue that Kenya should be wary of potential financial risks, especially in the context of large-scale infrastructure projects that involve significant public investment and long-term commitments.

Critics have also long pointed to the Adani Group’s track record on environmental and human rights issues. In India, the company has faced allegations of environmental degradation, particularly concerning its coal mining operations. Environmental activists argue that Adani’s projects have led to deforestation, displacement of indigenous communities, and significant ecological damage. These concerns have raised red flags among Kenyan environmentalists and human rights advocates, who fear that similar issues could arise in Kenya if stringent safeguards are not enforced.

The Adani Group has also faced criticism for its labor practices, with reports of poor working conditions, inadequate safety measures, and labor rights violations at various Adani-operated facilities. These issues have prompted Kenyan labor unions and social justice organizations to voice concerns about the potential treatment of workers involved in the AESL transmission projects in Kenya. They argue that stringent labor protections must be enforced to ensure that Kenyan workers are not subjected to exploitative practices.

Nelson Amenya, a whistle-blower about Adani Group’s plans to takeover and manage Kenya’s airports, warns, “Adani’s documented history of corruption, environmental destruction, and human rights abuses should be a serious warning for Kenya. This is a company with a track record of prioritizing profit over people, the environment, and the law. Kenya must be cautious in considering any partnership with such a corporation.”

Amenya, a Master’s student at HEC Paris, is also the co-founder of Afrinet Carbon, a company involved in developing carbon offset projects in Africa.

In India, the Adani Group is often criticized for its close ties to the government, particularly to Prime Minister Narendra Modi. Critics claim that Adani has benefited from favorable government policies and contracts, raising concerns about the undue influence of corporate interests on public policy. This relationship has led to fears in Kenya that similar dynamics could emerge, potentially leading to conflicts of interest, lack of competition, and compromised public interests in the energy sector.

There are also concerns about the impact of Adani’s projects on local communities. In India, the company has been accused of displacing communities and disrupting livelihoods, particularly in rural areas. Given this global record, Kenyan critics worry that the AESL projects could similarly displace communities or negatively affect local livelihoods, especially if land acquisition and compensation processes are not handled transparently and fairly.

In response to these allegations, the Adani Group has consistently denied any wrongdoing and emphasized its commitment to sustainable development, environmental management, and corporate responsibility. The company points to its investments in renewable energy and infrastructure as evidence of its positive contributions to the communities and countries where it operates.

However, for many Kenyan critics, these assurances are not enough. They are calling for increased scrutiny, transparency, and public participation in the decision-making process surrounding the AESL projects.

Sarah Wesonga, Programme Officer for Transparency and Access to Information at ARTICLE 19 Eastern Africa, highlights that while Kenya does not have a single, specific public participation law, however, it’s a constitutional requirement under the 2010 Constitution of Kenya. She notes that public participation is embedded in various laws, including the Public Finance Management Act, the County Governments Act, and the Environmental Management and Coordination Act.

“I don’t know if anyone has filed for an information request for all records relating to the agreement, including supporting data to rationalize the partnership because this is public information that should have been proactively provided,” Wesonga remarks, emphasizing that judicial precedence in Kenya has clarified that public participation must be meaningful, and not just a formality.

She also points out that although the Public-Private Partnership (PPP) Act includes provisions for public participation, there is no comprehensive law covering all areas of governance. Her observations highlight the concerns that have fueled demands for greater transparency.

Some critics argue that the Kenyan government should reconsider its partnership with Adani or, at the very least, ensure robust oversight mechanisms are in place to protect the public interest.

As Adani Group moves forward with large-scale infrastructure projects, Kenyans of various social media platforms including X Space, human rights organizations, including environmental, and social audit advocates, have raised concerns. They call on the government to ensure that public interests are not compromised.

These groups emphasize that without increased scrutiny, transparency, and robust oversight, the risks associated with these partnerships could outweigh the benefits. Ensuring that these measures are in place, they argue, is essential for protecting the public and ensuring that the projects contribute positively to the nation’s development.