• No decision had been arrived at on the proposed upgrade of JKIA adding that the project was still open for grabs.
• Entities interested in the upgrade may apply and if found suitable, to refund Adani for preparatory costs.
Image: ENOS TECHE
The government will not grant tax exemptions to Adani Holdings should they secure the JKIA upgrade deal, National Treasury Cabinet Secretary John Mbadi has said.
The CS, who appeared before the National Assembly’s debt committee, said the country’s laws will be applied when dealing with investors’ tax issues.
Mbadi said the 30-year tax relief the Indian conglomerate requested will be analysed further.
“The tax exemption requested by Adani will be subjected to cost analysis and benefits that will accrue to Kenyans before granting any such requests,” he said.
Mbadi said no decision had been arrived at on the proposed upgrade of JKIA, adding that the project is still open.
He said with the court stopping further dealings with Adani, other interested players are free to express their interest.
“The law provides that if we get a better offer, we can stop Adani. The only thing is that the new firm will compensate Adani for is any financial cost incurred up to this point of the process,” Mbadi said.
“We have not finalised anything hence any other party can do it. We are waiting for the courts, if they say terminate, we will, if it says continue, we will through the law,” he said.
The Cabinet Secretary was before the National Assembly’s Public Debt and Privatisation Committee chaired by Balambala MP Abdi Shurie.
The CS said that the government would conduct due diligence before the deal is signed, adding that the risks for the period would be reviewed.
He said the government is already pushing for concessions from the private investor, including reducing Adani's earnings to 16 per cent from the proposed 18 per cent.
“We have so far negotiated and reduced the percentage from 18 to 16, the percentage includes 12 per cent as the base rate and four per cent as the margin,” the CS said.
The government resorted to the Privately Initiated Proposal because the “country was at a bad place financially to finance the project.”
Mbadi said international financing is shrinking.
“No one wants to give us money, so if we can get a person who can put his money to finance a project so that he can get back his money and we also benefit, then it’s a good deal,” Mbadi said.
“The financial situation of KAA, which is the contracting authority, is not looking good as it made a loss of Sh4 billion during the Covid-19 period.”
Mbadi and the Attorney General will review the project to prepare a memo to be taken to Cabinet.
“If in this process there is an illegality and questions to terminate it, then we will,” the CS said.
He said the government should have done better in communicating the deal.
“One of the biggest issues on this matter is secrecy, I'm convinced that the public should have been engaged earlier,” the CS said.