The Adani Group on Saturday clarified on reports of Kenya cancelling more than $2.5 billion in deals after the US’ allegations, saying it had not entered into any binding agreement to operate Kenya’s main airport.
President William Ruto announced the cancellation of the deal and another one in the energy sector running into billions of shillings.
On the pact it had signed last month to build and operate key electricity transmission lines in Kenya for 30 years, the group said the project did not fall within the ambit of SEBI’s disclosure regulations, thereby not warranting any disclosure on its cancellation.
The Adani Group was responding to notices sent by stock exchanges to confirm reports of Ruto ordering the cancellation of a procurement process that had been expected to award control of the country’s main airport.
The flagship firm Adani Enterprises Ltd, which houses its airport business, in a filing said it had in August this year incorporated a step-down subsidiary in Kenya to upgrade, modernise, and manage airports.
“While the company was in discussion with the relevant authority for the said project, till date neither the company nor its subsidiaries (i) have been awarded any airport project in Kenya, or (ii) entered into any binding or definitive agreement in connection with any airport in Kenya,” the firm said.
Adani Energy Solutions Ltd, the firm that operates power transmission lines, in a separate filing said on October 9 it was awarded the project to construct transmission lines in Kenya. Thereafter, it had incorporated a step-down subsidiary in Kenya.
“We submit that the project does not fall within the ambit of item 4 of Para B, Part A, Schedule III of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (Sebi Listing Regulations) which requires intimation to be made for any awarding, bagging/ receiving, amendment or termination of awarded/bagged orders/contracts other than in the ordinary course of business,” it said.
It said the award of the project was in the ordinary course of business of the company and its subsidiaries as they are engaged in the business of transmission and distribution of energy (among other things).
“Consequently, any cancellation of such Project will also not fall within the ambit of item 4 of Para B, Part A, Schedule III of the Sebi Listing Regulations,” it added.
Adani Energy Solutions Ltd had last month signed a project agreement with the Kenya Electricity Transmission Company Ltd (Ketraco) for developing three transmission lines and two substations.
Following the start of the termination process of the Adani Energy solutions and the Kenya Electricity Transmission Company Limited (KETRACO) deal, the government says it will only pay for verifiable costs or not paying the Indian conglomerate at all for not providing sufficient records for due diligence.
Ketraco adds, the cancellation of the deal, will slow down extremely urgent energy projects to address transmission loses and power blackouts.
“What we had agreed is that any cost that is verifiable, in terms of the Environmental Assessment Reports, and we know the cost of doing this, can be reimbursed back to Adani. The Law also gives a maximum cap, and vis a vis in terms of arguing for not paying,” John Mativo, Managing Director, KETRACO said.
With 90 pending projects that face a financing gap of Sh650 billion, KETRACO says, it will explore other options to finance the project, citing financial constraints the government faces.
“And the quickest investor to come on board, is local financing from Kenya. This can be done through insurance schemes, pension schemes and SACCOs, because it’s the quickest way and due diligence becomes faster and move forward,” Mativo added.
The government says, given strained power lines, power loses and the move toward high voltage lines from the current medium voltage lines, there is need for quick alternative options that will help meet the set deadlines.
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