Kenya is eyeing Adani-type deals worth Sh70 billion in the year starting July, as the country increasingly turns to the Public Private Partnership (PPP) model to plug the infrastructure gap.
Treasury Cabinet Secretary John Mbadi on Thursday said the State is banking on the PPP model to deliver 32 projects comprising the construction of electricity transmission lines, new dams and building roads.
The increased use of PPPs to finance infrastructure projects is aimed at reducing the use of debt and taxes to build roads, airports, power plants and electricity transmission lines
Public debt went up following five years of increased borrowing, making it sustainable. Under PPP deals, private financiers build roads and recoup their investments through avenues such as tolling.
Kenya last year cancelled deals that sought to award Adani Group the upgrade of Jomo Kenyatta International Airport (JKIA) and construction of power lines amid sharp criticism over concerns about a lack of transparency and value for money.
Treasury is betting on PPPs to finance the construction of highways and other infrastructure after public debt ballooned amid the push from the International Monetary Fund for open and transparent projects.
“Currently, there are 32 PPP projects at various stages which are targeted to mobilise Sh70 billion in the Financial Year 2025/26 through private investments in priority sectors like energy, water, housing, health and transport,” Mr Mbadi said yesterday in the 2025/26 budget statement.
The Treasury had earlier disclosed 33 projects that were at various stages of the PPP project cycle, with 15 undergoing feasibility studies as of the end of April this year, while a further five were at the proposal stage.
The major projects at the advanced stage are four power transmission lines that are expected to cost $245.93 million (Sh31.8 billion).
The lines are the 220 kilovolts (kV) Kiambere-Maua-Isiolo, 220kV Kwale - Shimoni (Kibuyuni), 132kV line from Meru to Maua and 132 kV Kipevu-Mbaraki line.
Adani Group, via its energy subsidiary, had controversially been awarded a deal to build power transmission lines and expand the JKIA. But the indictment of Mr Adani in the US in November last year forecd Kenya to cancel the deal.
Many dams that include Ndarugu 2, Galana and Londiani are set to be built under the PPP model, where investors will operate the facilities and sell to the government to recoup their investment.
Kenya’s public debt crossed the Sh11.35 trillion mark last month, squeezing the room to tap more debt to finance projects even as the government remains hard-pressed to initiate development projects that are key to creating jobs, notably casual employment.
In the ten months to April this year, Kenya used 69.6 percent (Sh1.254 trillion) of the tax revenues (Sh1.8 trillion) collected in the period, to pay debt, highlighting the precarious state of affairs that has forced the Treasury to push for more PPP deals.
“Progressively, our debt carrying capacity has narrowed. This calls for prudence and discipline on how we manage and take on new debt,” Mr Mbadi added.
Some five PPP-funded projects have already been completed and are operational, notably the 27-kilometre Nairobi Expressway which was completed in 2022.
The double-decker highway connects JKIA to Rironi in Westlands and has been key in easing traffic along this stretch.
