Adani-KETRACO Deal: What To Know About KSh 94b Tender To Build Kenya's Power Transmission Lines

• Energy Cabinet Secretary (CS) Opiyo Wandayi confirmed Adani Energy Solution's deal with Kenya Electricity Transmission Company (KETRACO)
• The Indian firm submitted its proposal to KETRACO in 2023, seeking to build power transmission lines for over KSh 94 billion
• KETRACO managing director John Mativo revealed that the deal is yet to be signed and will save the country a shortfall of KSh 645.2 billion to meet transmission demand

TUKO.co.ke journalist Wycliffe Musalia has over five years of experience in financial, business, and technology reporting and offers deep insights into Kenyan and global economic trends.

Kenya is yet to sign a deal with Adani Energy Solutions, a subsidiary of Adani Group.

This followed a similar controversial lease deal between the sister company Adani Airport Holdings and Kenya Airports Authority (KAA).

On Monday, September 16, Energy Cabinet Secretary (CS) Opiyo Wandayi confirmed the Adani Energy Solution's deal with Kenya Electricity Transmission Company (KETRACO).

CS Opiyo said the proposal was aimed at developing key transmission lines and substations in Kenya.

What's Kenya's power transmission expansion plan?

The Adani Energy Solutions deal came as KETRACO leveraged its Transmission Master Plan 2023-2042, which outlines the necessity for 5,672 kilometres of new high-voltage lines.

The plan estimated the system peak demand to hit 2,149MW recorded in 2022 (base year) to 6,093MW in 2042.

KETRACO noted that electricity consumption is expected to rise from 12,985GWh in 2022 to 36,291GWh in the reference scenario, 61,523 GWh in the vision scenario and 31,506GWh in the low scenario by 2042.

"To meet the projected demand, evacuate the planned generation projects, and meet all the National Transmission Grid Code requirements, the transmission network must be expanded by approximately 6,510km in route length (11,131km in circuit length) of high-voltage transmission lines and 18,866MVA transformation capacity by the year 2042," read the plan in part.

The plan envisions expanding the transmission network by about 9,605.5 kilometres and increasing transformation capacity by 15,891 MVA.

Kenya's power transmission network currently operates at 132 and 220kV. The size of the transmission network (400kV, 220kV, and 132kV) by circuit length is approximately 9,011 km, of which 5,476km (60.77%) is owned and operated by KETRACO.

This includes 1,112km of 132kV lines, 651km of 220kV lines, 2,431km of 400kV and 1,282km of 500kV lines.

KETRACO has completed and commissioned 39 new substations with 5,928MVA capacity and 30 bay extensions.

Is there Kenya's power transmission deal with Adani?

KETRACO managing director John Mativo revealed during the public participation forum on Monday that the company is in the stages of negotiating Public-Private Partnership (PPP) proposals with Adani Energy Solutions.

Mativo affirmed that KETRACO is yet to agree with the terms set by the Adani Energy Solutions proposal.

"The projects are currently undergoing thorough risk assessments and legal reviews, with no contracts signed yet," Mativo explained.

He noted that Adani Energy Solutions submitted its proposal in 2023 to build 388 kilometres of power transmission lines.

What's in Adani-Kenya power transmission deal?

The deal proposed to construct three power lines of high-voltage covering 388 kilometres.

The Indian firm proposed to build a new 206-kilometre Gilgil-Thika-Malaa-Konza line, 95 kilometres linking Rongai-Keringet-Chemosit and approximately 98 kilometres for the Menengai-Ol Kalou-Rumuruti conduit.

It also sought to build two substations, including the 132kV Thurdiburo substation and the 400/220/132kV substation at Rongai.

KETRACO and Adani Group estimated the project to cost $1.01 billion (KSh 130.3 billion, based on the current exchange rate) but revised it to $736.5 million (KSh 94.9 billion).

“We have managed to reduce the figure to $736.5 million (KSh 95.9 billion) and we are confident that we can cut another $40 million (KSh 5.2 billion),” said Mativo.

Mativo revealed that the company proposed a cost rate of 11.5% and a 16% equity return rate, but KETRACO offered a lower 9.5% cost of debt and 14% rate on return.

According to Business Daily, India’s Adani Group wants $4.92 billion (KSh 634.5 million) monthly from the deal, which is expected to be completed in 2028.

KETRACO expects to earn annual revenue of KSh 13.4 billion from the deal.

Is there another company in Kenya's power deal?

The KETRACO MD explained that it received two proposals for its power transmission project.

These included Adani and Africa50, a unit of the African Development Bank.

In 2018, Africa50 submitted its proposal to build a 237-kilometre transmission line.

Why Kenya needs Adani, Africa 50 power deals

Mativo revealed that Kenya needs $5 billion (KSh 645.2 billion) to meet its power transmission infrastructure demands.

"To bridge the financing gap in power transmission, KETRACO is exploring partnerships with private companies like Adani Energy Solutions," said Mativo.

According to the KETRACO Transmission Master Plan, the total investment requirement is estimated at $4,778 million (KSh 616.2 billion).

The company has already secured $987 million (KSh 115.7 billion) through commitments from development partners' assistance and the EPC + Financing framework.

"This implies that the financing gap is approximately $3,791 million (KSh 488.9 billion)," the report read in part.

Are Adani Group deals controversial?

President William Ruto's administration is keen to sign two controversial deals with Indian conglomerate Adani Group.

However, details of these multi-billion shilling deals remain unclear to the public, a move that saw airport workers strike for almost 18 hours over the JKIA lease deal.

Two years after taking over the country's leadership, the Kenya Kwanza government has entered into similar agreements that remain controversial.

Proofreading by Asher Omondi, current affairs journalist and copy editor at TUKO.co.ke.