NAIROBI, Kenya Sep 24-National Treasury Cabinet Secretary John Mbadi has defended the potential takeover of Jomo Kenyatta International Airport (JKIA) through Public Private Partnership owing to the country’s liquidity issues.
This is even as he allayed fears that the deal between Adani Holdings Limited and Kenya Airports Authority (KAA) has been finalized saying the takeover of the airport by any potential investor is still open.
He told members of the National Assembly Public Debt and Privatization Committee that the concessionary agreement is still on the negotiation stage until all sticky issues are addressed.
“We are at public participation that allows Kenyans to get information on the agreement and they can subsequently give their views. If Kenyans say no then it will be terminated,” said CS Mbadi.
The National Treasury Cabinet Secretary rejected calls for the government to borrow concessionary loan to upgrade the JKIA facility saying the airport should be upgraded off the government balance sheet.
CS Mbadi explained that the Kenya Airport Authority has been on a downward trajectory in revenue performance since the and hence any loans borrowed for the government to manage the Sh1.1 trillion asset is not promising.
“The global economy is in turmoil and no one is willing to give us loans including the international lenders. We have no space to borrow more loans. We pay Sh 1.1 trillion in debt which is 50 percent of what we collect,”
“I want to support the Public Private Partnership with all my life as long as we ensure there is no corruption and we do it within the law,” he expressed.
In the documents tabled before the committee, Adani Holding Limited is expected to inject Sh 6.5 Billion revenue every year which is expected to be reviewed upwards after every five years in the 30 years leasehold agreement.
The House team chaired by Balambala MP Abdi Churiye questioned why the JKIA airport takeover was not subjected to competitive bidding raising concern that the Private Initiated Proposal (PIP) was initiated in favor of Adani Holding Limited.
The Public Private Partnership Act provide four procurement methods which include Direct procurement, Competitive bidding, Restricted bidding and Public Initiated Proposal.
Kitui Woman Representative Irene Kasalu questioned why the procurement tender was not subjected to competitive bidding arguing the Private Initiated Proposal (PIP) method is expensive.
“The Private Initiated Proposal (PIP) is the worst since the country doesn’t have the time to do feasibility report. Don’t you think this process is expensive and we could borrow the concessional loan to upgrade JKIA?” Kasalu queried.
Baringo North MP Joseph Makilap casted aspersion on the procurement method saying the project is not suitable for closed procurement under the PIP method.
“I am not convinced that PIP is the best method.The originator should be KAA on what changes should be made on the airport.This PIP is what is bringing a lot of problems here,”Makilap noted.
CS Mbadi defended the PIP procurement method saying the rigorous due diligence exercise undertaken on the interested parties ensures that the country receives value for money adding that competitive bidding is not always the best method.
“As at now another interested party can come up and give us a better deal, we are still at the preliminary stages. If we get a better deal then we can stop this one of Adani and get into a new deal with the new entrant who will move to compensate Adani,” he said.
The National Treasury Cabinet Secretary admitted that the project is facing headwinds since the public was not involved from the onset of the project that has now led to acrimony.
“This project has faced headwinds because the information about it has not been made to the public which is debatable since this is a procurement process and the public are involved at a certain stage,” Mbadi averred.
He explained that court cases have hindered the public participation exercise and due diligence exercise on the Indian firm before the final concessionary agreement is signed.
“The process on the public participation began at a time of acrimony when the KAA staff had striked.This process has been stalled due to a court case but the government had initiated the process,”Mbadi noted.
Source: capitalfm
