Kenya abandons the Adani contract and turns to development banks for airport expansion

Kenya has asked foreign development lenders to help pay for a $2 billion expansion of its main airport in Nairobi. This comes nine months after the country backed out of a deal with India’s Adani Group after the US charged its founder with fraud.

The East African country is looking for new ways to pay for infrastructure projects because its debt is rising so quickly. Next month, the country will also issue a securitized bond for 175 billion shillings ($1.36 billion) to pay for road construction, Transport Minister Davis Chirchir told reporters.

Chirchir said the government had “written” to development groups “to basically tell them there’s a chance to borrow money from the Jomo Kenyatta International Airport to build the airport.”

It had been talked to with the Japan International Cooperation Agency, China Exim, KFW, the European Investment Bank, and the African Development Bank, Chirchir said.

As part of the airport development, a new terminal building and a second runway will be built. When asked about the money, Chirchir said that the government would look for a contractor to do the job.

The new plan is different from the old one because Adani would have built the expansion and then been given a 30-year lease to run the airport. “Instead of bringing concessioning to build the airport, we build the airport that we can concession later,” he said.

Last year, that plan was scrapped when U.S. officials charged Gautam Adani and several executives with lying to U.S. investors and paying bribes to get power contracts in India.

The Adani Group has said that the claims are “baseless” and that it is working with the legal process.

Chirchir said that the government would securitize a portion of the fuel tax it charges drivers as part of the road building bond issue. He also said that the bond would be split into two halves so that it could be listed both locally and offshore.

Chirchir said it was too early to say which foreign market the bond would be offered in.