Wamuzi News Ke
Kenya’s major public-private partnerships (PPPs) scheme for infrastructure financing has suffered a huge and expensive hit that has revealed the weak points in the Treasury’s financing system.
The Ministry of Energy’s decision to cancel the project that was in the spotlight, the energy transmission project with Adani Energy Solutions Limited (AESL) of India, has caused a serious Sh32.3 billion financing gap, and this has had a negative impact on the country’s image as a credible partner for development projects.
Initially, the project included the construction of crucial high-voltage electricity transmission lines by AESL across Central Kenya, but it was canceled on November 21st, 2024, due to a new allegation in the US concerning the founder of Adani paying about $265 million as bribes to Indian officials, which he denied.
It was to be an extensive network of transmission lines that would not only strengthen the grid but also open new areas for electricity access. President William Ruto canceled the deal, thus scrapping the power lines entirely.
The revelations about the government’s plans indicate that financing through PPPs had been heavily based on this single project. The Treasury’s figures reveal that the total inflows from public-private partnerships for the year 2024/25 amounted to only Sh17.7 billion, which is a small fraction of the initial Sh50 billion target set for the financial period.
The Adani project collapse has been cited as the major reason behind this huge difference, and it is a clear indication of how quickly reliance on a small number of big investors can mess up national planning.
Industry experts have cautioned that this disruption will impact the government’s plans to build up essential infrastructure without resorting to public debt, especially now when interest rates are increasing and the budget is tight.
In the past, the money from PPP has been very unstable and ranged from over Sh80 billion in 2021/22 to just Sh4.3 billion in 2023/24, indicating that this way of working still has many ups and downs and is mainly reliant on a few very lucrative deals.
The administration has made known its plan to close the gap with other undertakings and to reorganize the PPP pipeline, but the players in this area are warning that the shutdown will take much stronger risk management and wider investor involvement in order for Kenya’s infrastructure dreams to come true in the next few years.
