Millions Adani Could Be Paid After KETRACO Deal Termination
The Kenyan government is expected to face a minor cost following the sensational withdrawal of the deal with Indian conglomerate Adani Holdings, as the search for a new private partner commences.
Questions have been raised about the financial ramifications of terminating the project with KETRACO, which was in its advanced stages.
This follows President William Ruto’s surprise declaration on Thursday that the government would withdraw from any negotiations with Adani.
Treasury Cabinet Secretary John Mbadi sought to clarify the details of the transaction following President Ruto’s State-of-the-Nation address, stressing that the country will not suffer any losses due to the Privately Initiated Partnership procurement system in place.
Mbadi also indicated that because only a deposit was provided to the Indian conglomerates, the amount will be reimbursed.
Adani-KETRACO Deal Termination:
— Citizen TV Kenya (@citizentvkenya) November 23, 2024
KETRACO says no funds will be lost due to the termination
Govt to only pay assessment report done by Adani Group
Mativo: What we had agreed is any cost that is verifiable
Ruto ordered cancellation of Adani deals at JKIA and KETRACO… pic.twitter.com/GY7ZhmvqEC
However, due to the complexities of a partnership involving a state and a commercial partner, the government confronts a time-consuming three-step process to cancel the agreement, which will also require payment of demonstrable expenses.
At the time, the only substantial provable cost is payment for the evaluation reports, which is relatively little when all aspects are considered.
“What we had agreed is that any cost that is verifiable, in terms of the Environmental Assessment Reports, and we know the cost of doing this, can be reimbursed back to Adani,” John Mativo, Managing Director of KETRACO, said.
“The Law also gives a maximum cap and vis-a-vis in terms of arguing for not paying.”
In Kenya, the cost of an environmental assessment report (EIA) varies according to the project and the expert.
Assessment expenses are approximately 0.1% of the project’s overall cost, with a minimum of Ksh10,000 and no maximum limit.
The KETRACO-Adani Energy transaction had a claimed cost of Ksh96 billion for 372km of transmission lines, therefore an EIA of up to Ksh96 million could be required.
However, all of this is subject to interpretation of the stipulations of the government-Adani agreement.
Kenya’s Next Move
KETRACO is now preparing to provide Adani with a full report outlining its reasons for withdrawing from the arrangement.
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Adani could seek recovery for the costs of the assessments it conducted before the start of the project.
However, the Indian company could respond by writing to confirm its mutual withdrawal from the agreement with KETRACO.
Furthermore, the government has grounds to avoid disregarding the EIA expenses since it might allege that Adani failed to present sufficient documentation for due diligence before committing to a transaction.
On Wednesday, US authorities accused Adani Group founder Gautam Adani and seven others of paying bribes to Indian officials totaling Ksh34 billion. – accusations that the group refutes.
Millions Adani Could Be Paid After KETRACO Deal Termination
