Setback for Gautam Adani: Kenya court suspends Rs 6,189-crore project

A Kenyan court has suspended a $736 million (over Rs 6,189 crore) government agreement with India’s Adani Group for the construction and operation of high-voltage power transmission lines over a 30-year period, a Bloomberg report said.

This decision could have significant implications for Kenya's energy infrastructure and foreign investment climate. The suspension may also lead to legal challenges and further discussions about the project, which is crucial for enhancing the country’s power distribution capacity. It's a developing story that will likely impact both local and international stakeholders.

The recent public-private partnership between the state-owned Kenya Electricity Transmission Company (KETRACO) and Adani Energy Solutions aimed to tackle ongoing power outages and stimulate economic growth in the country.

Finalised earlier this month, the collaboration seeks to enhance Kenya's energy infrastructure, which is crucial for supporting various sectors of the economy. By improving the reliability of power supply, this initiative could contribute significantly to development efforts and attract further investment to the region.

The partnership reflects a growing trend of international collaboration in addressing local energy challenges.

On Friday, however, high court judge Andrew Bahati Mwamuye ruled against Kenyan authorities, prohibiting them from proceeding with the project or entering into new agreements with Adani Energy Solutions for the development of transmission lines, substations, or other electrical infrastructure.

This ruling adds uncertainty to the partnership aimed at addressing power outages and improving energy infrastructure in Kenya. The decision may impact not only the specific project but also the broader landscape for foreign investment and infrastructure development in the country.

The Law Society of Kenya, which initiated the court case, argued that the agreement with Adani's company constitutes "a constitutional sham".

They claimed that the deal lacks transparency and fails to uphold essential constitutional principles. This perspective highlights concerns about governance and accountability in public-private partnerships, particularly regarding how such agreements are negotiated and implemented.

The court's ruling may reflect these broader issues, emphasising the need for transparency in government dealings and the protection of constitutional rights.

The Law Society of Kenya further argued that KETRACO and Adani Energy Solutions did not conduct sufficient public participation in the project, which is mandated by Kenya's Public-Private Partnerships Act of 2021.

The Indian billionaire's group has faced increasing scrutiny in Kenya. Recently, a court blocked president William Ruto's proposal to grant Adani Airport Holdings Ltd a 30-year contract to operate Kenya's main airport. This decision adds to the challenges the Adani Group is experiencing in the country, and raises questions about the broader implications for foreign investment and infrastructure development in Kenya.

As legal and regulatory hurdles mount, the group's ability to navigate the political landscape and secure contracts may be significantly affected.