Kenya drops over $2.5 billion of Adani deals after US indictment

By George Obulutsa and Aaron Ross

NAIROBI (Reuters) -Kenyan President William Ruto said on Thursday he had ordered the cancellation of a procurement process that had been expected to award control of the country's main airport to India's Adani Group after its founder was indicted in the United States.

Under the proposed deal worth nearly $2 billion, the Adani Group was to add a second runway at the Jomo Kenyatta international airport and upgrade the passenger terminal in exchange for a 30-year lease.

Ruto also said he was cancelling a separate 30-year, $736-million public-private partnership deal that an Adani Group firm signed with the energy ministry last month to construct power transmission lines.

"I have directed agencies within the ministry of transport and within the ministry of energy and petroleum to immediately cancel the ongoing procurement," Ruto said in his state of the nation address, attributing the decision to "new information provided by investigative agencies and partner nations".

Ruto's announcement was met with thunderous applause and cheers from lawmakers in parliament, where he gave his address. The deals have drawn sharp criticism from many politicians and members of the public over concerns about a lack of transparency and value for money.

Representatives from Adani Group did not immediately respond to a request for comment.

U.S. authorities said in the indictment on Wednesday that group founder Gautam Adani, one of the world's richest people, and seven other defendants agreed to pay about $265 million in bribes to Indian government officials.

The Adani Group denied the allegations and said in a statement that it would seek "all possible legal recourse".

The Adani Group made the airport proposal in March under a procedure that circumvents competitive bidding, but it did not become public until July through a leak on social media.

A Kenyan court temporarily blocked it in September in response to a lawsuit arguing it did not offer taxpayers value for money.

Senior government officials, including Ruto, had repeatedly defended the deals despite allegations made in 2023 by U.S. short-seller Hindenburg Research - denied by the Adani Group - of improper governance practices at the company.

As late as Thursday morning, Energy Minister Opiyo Wandayi told senators he expected the transmission lines contract to go ahead as there was no bribery or corruption involved in its awarding.

George Kamau, a Kenyan lawyer specialising in public procurement, said the Adani Group might go to arbitration to challenge the cancellations, especially of the transmission lines deal that had already been signed.

"That said, any dispute resolution framework ... is likely to lean towards the state, considering the fact that the deal has been cancelled on the basis of integrity issues," he said.