Valued at over $150 billion, Adani Group is a giant Indian conglomerate that dominates India’s private sector. Over the years, it has steadily expanded its network across Asia and Africa.
However, its Africa expansion was dealt a major blow in late November when Kenyan President William Ruto canceled its contracts worth round $2.5 billion with Kenya Electricity Transmission Company Limited (KETRACO) and Jomo Kenyatta International Airport (JKIA).
The move followed the US indictment of Adani Group’s chairman and founder, Gautam Adani, India’s second richest man, along with other top managers, over alleged bribery committed in India. The group denied the allegations.
The proposed $736 million deal with KETRACO was a 30-year public-private partnership agreement, where Adani Group was set to build three high-voltage power transmission lines. Additionally, it was expected to finance two power station projects in Kisumu and Kajiado counties. The reason behind the cancellation is a petition from the Law Society of Kenya. As the civil society group raised concerns about the lack of public participation and the adherence to constitutional standards, Kenya’s High Court ruled in its favor, suspending the implementation of the project agreement.
Similarly, Adani Group also faced challenges with its agreement with JKIA in Nairobi. This $1.85 billion plan deal involved expanding the existing airport by constructing a new passenger terminal and a second runway, with funding sourced through debt and equity.
In return for its investment, Adani Group was set to operate the airport for 30 years before handing it over to the Kenyan government. However, allegations arose over some specific clauses in the agreement, including revised terms for current staff and revenue collection, raising concerns about potential job losses and reduced competitiveness for the airport.
Further, the leasing plan faced strong opposition from both political and private-sector groups, culminating in a protest that became famous as #OccupyJKIA. As the protestors accused the government of lacking transparency in the negotiations, eventually, the government had to release all the details. However, the airport workers remained steadfast, threatening to stage a “mother of all strikes” that would disrupt airport operations across Kenya. Ultimately, the government yielded to the pressure and cancelled the deal. Adani Group was also expected to invest in Kenya’s hospitality and real estate sectors. Now, these prospects are in question.
While this presidential announcement surprised many, Ruto explained that the decision was prompted by allegations of Adani Group’s involvement in a multibillion-dollar bribery and fraud scheme in the US.
Washington's hand?
KETRACO, the state-owned company, manages high-voltage power lines in Kenya. It is in dire need of an expansion to its transmission networks. Yet, this would require substantial national budget financing and would thus be impossible without external investment.
The Nairobi airport was built in 1978 to handle only 2 million passengers annually. Previous attempts to upgrade it failed miserably due to funding gaps and corruption, and the airport now lies in a completely deteriorating and overcrowded state.
From the outset, Ruto has been relying on public-private partnerships to ease the burden on Kenya’s already strained finances, especially amid heavy debt repayment obligations. Thus, Adani’s exit from Kenya would also put him in dire straits and make his tasks difficult. He has been under significant pressure to deliver these mega infrastructure projects and now will have to find alternative funding sources.
To make matters worse, since June, thousands of predominantly Gen Z protestors have flooded the streets to demonstrate against the controversial 2024 Finance Bill, with some labelling the movement a sub-Saharan “African Spring.” This setback could seriously jeopardize Ruto's presidency if he doesn’t quickly secure alternative funding sources.
Meanwhile, in September, Ruto met with President Xi Jinping in China at the Forum on China-Africa Cooperation. During the summit, he was promised increased Chinese support in accessing concessional funding for development. This financial assistance, when realized, may help Ruto achieve his modernization goals for Kenya. While a Chinese campaign against the Indian conglomerate seems unlikely at this stage, it cannot be entirely ruled out.
The US has also been working to strengthen its ties with Kenya. In May 2024, Ruto visited the US, where his government was praised for upholding democracy and filling the leadership vacuum in the region. Kenya is among the largest beneficiaries of the African Growth and Opportunity Act (AGOA).
Beyond economic diplomacy, Kenya also holds strategic importance for the US due to its role in leading multinational peacekeeping missions in Haiti and as a potential ally in addressing regional crises. Ruto’s Kenya represents a crucial ally for Washington, particularly when its influence wanes across the continent. Thus, a potential US role in the cancellations of the deal with Adani should be thoroughly investigated.
Spillover
While the legal process will continue to unfold and the facts will eventually emerge, the Kenyan setback could have significant repercussions for Adani Group’s Africa expansion plans.
In the African region Adani Group nurtures a long-term vision. In June 2024, the logistics infrastructure arm of the conglomerate, Adani Ports and Special Economic Zone, acquired a container terminal in Dar es Salaam, a major city and commercial port on Tanzania’s Indian Ocean coast, as part of a joint venture with Abu Dhabi Ports. The group is positioning the port as a crucial trade hub for East Africa. Adani has also expressed interest in investing $900 million in Tanzania’s power transmission network through public-private partnerships.
The conglomerate also plans to develop wind and solar power projects in Morocco to produce green hydrogen, particularly to cater to the European market.
Gautam Adani has, however, reaffirmed his commitment to the legal process, vowing to clear the allegations and come back stronger. Given the size of its ambition and investments, Adani Group is not likely to abandon its Africa vision anytime soon. Yet, its next move after it lost the Kenya deals will be closely watched.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.