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Another Adani deal, CBK's dollar shower, & SHIF troubles.
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Kenyan Wall Street
October 14, 2024
What's Inside
Adani Signs US$736mn Power Deal Amid Controversy
Indian billionaire Gautam Adani’s power transmission unit, Adani Energy Solutions, has signed an agreement with the Kenya Electricity Transmission Company Limited (KETRACO) to develop, finance, and maintain key power infrastructure in Kenya.
The USD 736 million deal covers the construction of 388 kilometers of high-voltage transmission lines across the country. Adani will manage these lines for 30 years, before transferring the assets to KETRACO.
The project cost, estimated at KShs 95.68 billion, will be financed through debt and equity. Kenya’s Ministry of Energy highlighted that this agreement, concluded after four months of negotiations.
A Kenya-based organization has moved to court, challenging the government’s decision to award the contract, citing the lack of public participation and transparency in the process.
The Commission for Human Rights and Justice has also demanded KETRACO disclose the terms of the agreement, a matter that remains under judicial review.
This comes at a time when Adani is eyeing further deals in Kenya, including a 30-year concession to manage Jomo Kenyatta International Airport (JKIA), a proposal that has also faced public backlash over transparency concerns.
Stay updated on this and other stories on The Kenyan Wall Street.
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.”
Why Central Bank is Buying up Dollars
The Central Bank of Kenya (CBK) is buying dollars to build up foreign exchange reserves and curb volatility, Governor Kamau Thugge disclosed during the post-MPC briefing on Wednesday.
Foreign exchange reserves have been on an upward trajectory in the past 5 weeks, accumulating about US$837 million in the period.
The current usable reserves stand at US$8.2 billion, enough to maintain 4.2months of import cover according to data by CBK.
Governor Thugge attributed the increase in foreign exchange reserves to the Central Bank buying excess dollars in the foreign exchange market to provide adequate buffers against potential shocks.
“We have had a significant increase in foreign exchange, both from banks, but also remittances. So, in order to moderate the fluctuations and volatility in the exchange rate, we have indeed been buying foreign exchange,” Governor Thugge said in the post MPC briefing.
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