ODM leader Raila Odinga has warned that the handling of Public Private Partnerships in the country could make or break the economy.
In a seeming endorsement of the controversial Adani-JKIA deal, Raila said the ongoing energy and airport projects present a critical test that could make or break Kenya’s ability to compete in the field of infrastructure development for a considerable period.
"Given the current financial status of the country, PPP is the only way out of cash-intensive projects. “
"If we plant doubts in our capacity to handle PPPs, we must be prepared for a prolonged period of development drought and risk being overtaken by our neighbours,” Raila said.
He spoke at a press briefing on the sidelines of an ODM delegates retreat in Mombasa on Sunday.
Raila said PPPs must be handled with transparency and eliminate all red tape and legal hurdles placed.
“I would urge all the agencies concerned to address all the concerns raised by Kenyans on these projects and ensure that we do not spook foreign capital away from the Kenyan economy,” he warned.
His statement comes amid reports that the government has already signed a Sh96 billion deal with Adani Energy Solutions to manage transmission lines for 30 years.
The former Prime Minister said too many restrictions in the PPP law could scare away actual investors and potential investors yet Kenya desperately needs private investments to achieve economic progress.
He said Kenya desperately and urgently needs to upgrade its infrastructure of roads, railways, ports, airports, electricity and cyber connectivity, but lacks the massive financial resources needed to meet these infrastructure needs.
He said the principal source of public revenues, which is the raising of taxes, has run out of favour with the citizens of Kenya.
“The public is not in the mood for higher taxes that lead to high cost of living,” he said.
“The public is equally not in favour of more borrowing from bodies like the International Monetary Fund and the World Bank or even from other countries, given the debt burden we are already grappling with.”
The ODM leader said as far as he knows, Adani Group is a major player in the infrastructure industry, with the USB200-billion company, having transformed airports and ports in Gujarat and Bombay in India.
He admitted he was introduced to the company by then India’s chief minister Narendra Modi while he was Kenya’s Prime Minister during the Grand Coalition Government.
“Under the circumstances, the most viable, tested and reliable means through which we can sustainably address the country’s infrastructure needs is through Public Private Partnerships,” Raila said.
He said this is the route that has been preferred by many countries that are undergoing similar challenges to Kenya’s about delivering public services under difficult economic situations.
“I have therefore followed with a lot of interest the current debate surrounding the efforts to improve JKIA and our energy sector through PPP arrangements."
“I am aware that for several years now, Jomo Kenyatta International Airport has needed overhaul and upgrade to bring it to par with the new airports being developed by our neighbouring countries,” he said.
The airport handles about 7.5 million passengers annually, but four million of those passengers use temporary tented structures. In the last financial year, JKIA handled 8.5 million passengers, meaning it has already optimized its passenger capacity.
“Its runway that is designed for 35 movements per hour is already doing 21 movements and is set to operate at full capacity by 2028, four years from now. Time is running out for the overhaul, modernization and expansion of JKIA,” Raila said.
He noted that the country needs to protect the framework of PPPs and the investors that show interest in putting money into our public services and utilities, otherwise no investor will set foot in Kenya.
“In the interest of protecting the principle and framework of PPPs and potential investors, we have a responsibility to ensure our processes are transparent, cost-effective and accord equal opportunity to all would-be investors, in line with the PPP Act,” he said.
“We all have misgivings about how the current proposed PPPs concerning JKIA and power distribution have been processed which has resulted in a raging debate over the involvement of the Indian firm in the airport and energy sector projects."
“Unfortunately, these misgivings have also resulted in a lot of misinformation regarding the investors who have made the PPP proposals,” Raila said.