The cancellation of Adani Energy Solutions Ltd’s (AESL) power transmission lines project has punched a Sh32.3 billion hole in the Treasury’s public–private partnership (PPP) funding projections, exposing the risks in Kenya’s strategy of financing infrastructure without adding to public debt.
Treasury data shows that PPP fund mobilization in the 2024/25 financial year reached Sh17.7 billion, far below the Sh50 billion target set at the beginning of the year. Officials directly linked the Sh32.3 billion shortfall to the termination of the Adani project, which had been expected to anchor PPP inflows for the year ending June 2025.
In budget proposal documents, the PPP Directorate noted that the target was not achieved due to the cancellation of the AESL power transmission lines project, underscoring how heavily the funding plan depended on a single mega investment.
Why the Adani project was cancelled
President William Ruto ordered the cancellation of the AESL project on November 21, 2024, following the indictment of Adani Group founder Gautam Adani in the United States. US prosecutors alleged that Mr. Adani paid about $265 million (Sh34.45 billion) in bribes to Indian government officials. The Adani Group has denied the allegations.
The decision immediately halted several high-voltage electricity transmission projects in Kenya with a combined estimated cost of $907 million (about Sh117.9 billion). These included a 197-kilometre 400KV line along the Gilgil–Thika–Mala–Konza corridor, a 101-kilometre 220KV line between Rongai, Keringut and Chemosit, and a 90-kilometre 132KV line linking Menengai, Ol Kalou, and Rumuruti.
Other affected components included new substations at Lessos, Rongai, and Thurdibuoro. Together, the projects were critical to strengthening Kenya’s electricity transmission network and evacuating power from generation sites to demand centres.
PPP strategy under pressure
The collapse of the Adani deal has highlighted structural weaknesses in the Treasury’s PPP funding approach. As fiscal space tightens and debt-servicing costs rise, the government has increasingly relied on PPPs to deliver large infrastructure projects. However, this strategy has often depended on a few large-scale investments to meet annual funding targets.
Treasury figures show that PPP inflows have become volatile. Inflows exceeded targets in 2021/22, when Sh80.6 billion was mobilized. This fell to Sh45.7 billion in 2022/23 before collapsing to just Sh4.3 billion in 2023/24. Although inflows recovered in 2024/25, the rebound was not enough to meet the Sh50 billion target.
During the last financial year, PPP funding was supported by just two projects. The Galana–Kulalu Food Security Project contributed Sh6 billion, on top of an earlier Sh6.5 billion, while the Orpower 22 Menengai Geothermal Power Plant Project accounted for the remaining Sh11.7 billion.
Outlook for PPP funding in 2026
Despite the setback, the Treasury remains optimistic about PPP inflows in the current fiscal year ending June 2026. It projects mobilization of Sh65 billion, exceeding the annual target of Sh50 billion.
Key projects expected to drive private capital inflows include the Rironi–Nakuru–Mau Summit Road Project, estimated at Sh150 billion; the Africa50 transmission lines project valued at Sh41 billion; and the National Transport and Safety Authority’s new generation driving license and traffic monitoring system, projected to cost Sh45 billion on completion.
Whether these projects materialize on schedule will be critical in restoring confidence in PPPs as a viable alternative funding model after the Adani cancellation exposed how quickly a single failed deal can derail the government’s infrastructure financing plans.
