JKIA takeover plan to strip KAA of resources

Wednesday March 18 2020

Public Investments Committee chairman Abdullswamad Nassir. He has opposed the planned takeover of JKIA by Kenya Airways. PHOTO | FILE | NATION MEDIA GROUP


Parliament has warned that the planned takeover of Jomo Kenyatta International Airport (JKIA) by Kenya Airways (KQ) will deprive the Kenya Airports Authority (KAA) of significant resources as the concession fee will not cover the operational costs of the country’s remaining airports.

In a progress report on the inquiry into the proposal, the National Assembly’s Public Investments Committee (PIC) pointed out that if the deal goes through, KAA will not have enough money to run airstrips and its head office.

“In Kenya Airways financial model as per the PIIP, the annual concession fee has been set at Sh2.9 billion in 2019, rising gradually to Sh3.6 billion and peaking at sh6.1 billion in 2033.

"In comparison, KAA’s non-JKIA operations in the 2019 financial year amounts to Sh6.6 billion, leaving a shortfall of Sh3.7 billion from the concession fee,” says the report.

“Kenya Airways’ proposal further assumes that KAA will retain all contingent liabilities, including those arising from JKIA operations, a situation that would leave KAA worse off financially,” it adds.



The committee, chaired by Mvita MP Abdullswamad Nassir, further expressed concern that the plan is being rushed through despite the obvious associated risks, such as its viability and the potential loss of jobs at KAA.

Documents tabled before the committee indicate that KAA was given a mid-December 2018 timeline to complete the transaction.

PIC has now written to Auditor-General Edward Ouko to conduct a special audit of the privately initiated investment proposal (PIIP) by Kenya Airways. This follows the committee’s order last week that the project be stopped to save Kenyans from losing money.

A letter from National Assembly Clerk Michael Sialai indicates that the audit should focus on the risks KAA and the public will be exposed to should the planned takeover succeed.

The letter, dated February 21 and signed by Mr Jeremiah Ndombi on behalf of Mr Sialai, adds that it will also focus on how KAA procured the services of MMC Africa for transnational advisory services

KAA has already paid MMC Africa Sh15 million as part payment.

“The committee would appreciate if the special audit is completed by March 4 to enable it conclude this matter,” the letter says.