Adani Secures Sh95.7bn Contract to Manage Kenya's Power Grid for 30 Years

Kenya's national electricity infrastructure is set to undergo a major transformation following the signing of a Project Agreement between the Kenya Electricity Transmission Company Limited (Ketraco) and Adani Energy Solutions Limited.

In a statement on Friday, Energy Cabinet Secretary Opiyo Wandayi announced this landmark agreement which is valued at approximately Sh95.68 billion (USD 736 million). The project, which has been in negotiation for the past four months, will see Adani Energy Solutions manage Kenya's transmission lines for a period of 30 years. This long-term commitment is designed to ensure the sustainability and efficiency of the country's power infrastructure. Upon completion of this term, the project and all associated assets will be transferred to Ketraco.

At its core, this initiative aims to address Kenya's persistent power blackout issues by developing, financing, constructing, operating, and maintaining critical transmission lines and substations across the country. The project is expected to play a pivotal role in supporting Kenya's economic growth and development aspirations by enhancing the reliability and accessibility of power. The financial structure of the project is noteworthy, with the Project Company responsible for raising all necessary funds through a combination of debt and equity. These costs will be repaid over the 30-year duration of the project agreement.

To ensure optimal value for money and promote local involvement, the final project cost will be determined through a competitive bidding process jointly managed by Ketraco and the Project Company. Before finalizing the agreement, Ketraco conducted thorough due diligence on Adani Energy Solutions, demonstrating the government's dedication to forming strategic partnerships that align with Kenya's development objectives.Opiyo Wandayi has defended the collaboration, highlighting the urgent need to improve Kenya's power grid to support its growing economy. However, the financial implications of this deal have raised eyebrows. Reports indicate that the Adani Group may seek a sum of Sh634.7 billion (approximately USD 4.92 billion) from Kenyan citizens over the next three decades.

This has led to concerns about potential increases in electricity prices as the company attempts to recoup its investment. Given that many Kenyans already struggle with high living costs, there is mounting pressure on the government to provide clarity on how this financial burden will impact consumers. The agreement outlines an ambitious project involving the construction of three high-voltage power transmission lines and two substations. These infrastructural developments are strategically positioned to enhance connectivity and stability within the national grid. Specifically, the project encompasses the 400kV Gilgil-Thika-Malaa-Konza line, stretching over 208 kilometres, and the 220kV Rongai-Keringet-Chemosit line, covering nearly 100 kilometres.

New substations are slated for construction at key locations to support these transmission lines. Wandayi has assured the public that extensive stakeholder engagement was conducted before finalizing the agreement. Despite these assurances, many Kenyans remain sceptical about the Adani Group's involvement in the country's energy sector. The Indian conglomerate has expressed interest in further expanding its presence in Kenya by developing hydroelectric power plants.

This move is motivated by Kenya's untapped potential in this area, including its favourable geography and high demand for hydropower. However, the Adani Group's controversial reputation and its activities in the region continue to fuel apprehension among Kenyans.