Adani Power: Kenyan Court Suspends $736 Million Line Deal

Kenya’s High Court just suspended a $736 million (around Rs.6,109 crore) deal between India’s Adani Power Ltd and Kenya’s state-owned Kenya Electrical Transmission Company (KETRACO). The project, signed earlier this month, planned for Adani to build and run crucial power lines across Kenya. But now, this ambitious 30-year venture is on hold.

What’s It About?

The deal hasn’t exactly gone smoothly. The Law Society of Kenya (LSK) slammed it as a “constitutional sham” and criticised it for being “shrouded in secrecy.” According to them, neither Adani Power nor KETRACO involved the public adequately in discussions, a big no-no under Kenya’s Public-Private Partnerships Act of 2021. This law mandates that any private sector company working on public projects must ensure thorough public participation. Simply put, Kenyans want a say in projects that affect their energy and infrastructure.

And it’s not just about the lack of transparency. The Kenya Human Rights Commission has also raised concerns about the agreement’s financial sense, questioning whether it truly benefits Kenyans. They argue it could lead to job cuts and lacks a clear value-for-money proposition. It’s also to note that Adani Group’s proposed project to lease Kenya’s main airport for 30 years recently stirred up similar controversy, raising concerns about the company’s role in Kenyan infrastructure.

The Government’s Side of the Story

Kenya’s energy ministry is backing the deal, saying it was selected through a competitive bidding process. They believe Adani Power’s involvement could be a game-changer, potentially alleviating Kenya’s frequent power blackouts and boosting economic growth. On October 11, the ministry argued that building new transmission lines could benefit businesses and reduce power outages, which have been a thorn in the side of many Kenyans.

Adani Power’s stock is trading at Rs.602.60, up 1.74% today, with a growth of 15.16% year-to-date and a stellar 68.35% surge over the past year.

Conclusion: For now, Kenya’s High Court has ordered a temporary halt to the deal until further review. The suspension is a setback for Adani Power’s broader ambitions in Kenya’s infrastructure sector. As the court considers the case, both supporters and critics of the deal await a decision that could shape the future of foreign public-private partnerships in Kenya’s infrastructure projects.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.