Court Blocks Proposal To Lease JKIA To Adani

This comes pending a judicial review filed by the Law Society of Kenya (LSK) and the Kenya Human Rights Commission (KHRC).

Marvin Chege Marvin Chege
Sep 9, 2024 - 19:56 Updated: Sep 9, 2024 - 20:24
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Court Blocks Proposal To Lease JKIA To Adani
Entrance to Jomo Kenyatta International Airport in Nairobi. /MARVIN CHEGE.VIRALTEAKE

The High Court has handed a significant victory for aviation players in Kenya by issuing an order blocking the Kenya Airports Authority (KAA) from moving ahead with its decision to lease the Jomo Kenyatta International Airport (JKIA) in Nairobi to Adani group, an Indian conglomerate.

This comes pending a judicial review filed by the Law Society of Kenya (LSK) and the Kenya Human Rights Commission (KHRC).

The order means that Kenyan aviation fans who were opposed to the leasing deal can breathe a sigh of relief after raising numerous issues regarding the planned Adani takeover which would have seen the Indian firm enjoy the lease of the country's biggest airport for 30 years.

Furthermore, in response to the opaque nature of the contract, KHRC and LSK sought details from JKIA in July and August 2024. 

A building housing Adani Group. /ADANI ENTERPRISES

The immediate stay order prevents any action on the Adani lease proposal until the judicial review is concluded, meaning even the government cannot conduct its thorough due diligence investigation into the Privately Initiated Proposal (PIP) submitted by Adani Airports Holdings Limited on the proposal and expansion of JKIA.

The case registered as HCJR/E199/2024, has been certified as urgent, with the court admitting the application for hearing even during recess. 

The LSK and KHRC argue in their submissions that the decision to lease Kenya's busiest airport to a foreign private entity was made without adequate consultation or transparency, a claim that KAA and other respondents must address in their responses, which are due within the next few days.

The substantive hearing will decide whether the lease agreement, which has raised concerns about national sovereignty and job security, can be continued or terminated entirely. The case is scheduled for further mention on October 8, 2024. 

The order now tosses the deal into unwanted territory and given Adani's recent international controversies, the Indian firm is going to need a miracle to overcome this one in its bid to modernize JKIA.

Adani has committed to a Ksh238 billion investment to upgrade and expand the airport. However, critics, including KHRC argue that Kenya could raise the necessary funds independently without giving up control of this critical national asset.

KHRC Executive Director Davis Malombe criticised the deal as “unaffordable,” highlighting potential job losses and significant fiscal risks to the public. The deal, he contended, offers no value for money to taxpayers.

The lease agreement stipulates that after 30 years, Adani would retain an 18 per cent equity stake in JKIA’s aeronautical business indefinitely. This would entitle the company to a concession fee starting at Sh6 billion, with a 10 per cent increase every five years.

KHRC argued that this arrangement violates Article 201(c) of the Constitution, which mandates that the benefits and burdens of resource use be shared equitably across generations.

Adani Enterprises recently set up a Kenyan subsidiary while raising its chances of taking over JKIA higher, despite intense opposition from aviation workers who went the extra mile of staging protests, demanding that the controversial deal be done away with.

The Kenyan subsidiary was set up by an Abu Dhabi group called Global Airports Operator, itself a subsidiary of Adani Enterprises, which was expected to own 100 percent of AIP's share capital. As part of the incorporation of the Kenyan company, Adani issued a share capital of Ksh6.75 million, consisting of 6,750 shares at Ksh1,000 each.

These developments came a day after sentiments by businessman and veteran hotelier, Mohammed Hersi on X hinted at more dire consequences that include Kenya being unable to build or expand other airports across the country, impeding the country's Vision 2030.

Aerial view of the Jomo Kenyatta International Airport (JKIA) in Nairobi. /FILE

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