Kenya Airways Eyes New Unit to Manage JKIA for 30 Years

The Jomo Kenyatta International Airport in Nairobi.
24 January 2019

Kenya Airways has proposed the formation of a subsidiary dedicated to managing operations at the Jomo Kenyatta International Airport (JKIA) for a concession period of 30 years.

KQ's plan, contained in its Privately Initiated Investment Proposal (PIIP), includes the creation a special purpose vehicle (SPV) -- a unit of a company which is shielded from the parent firm's financial risk -- to operate, maintain and develop JKIA.

"It (SPV) is set up under the conditions set out in Section 59 of the public-private partnership (PPP) Act," said Jonny Andersen, KAA managing director.

The PIIP is required to satisfy defined criteria, follow statutory steps and obtain approvals from the relevant regulators.

"The board of directors and management of the KAA, therefore, appointed transaction advisers to advise on the PIIP including carrying out comprehensive due diligence and evaluation of the PIIP. MMC Africa Law has been picked as transactional advisers," he said Wednesday.

Concerns raised

This addresses the concerns previously raised on the interests of KQ's ownership, which includes private investors unlike JKIA, which the government fully owns through the KAA.

According to Mr Andersen, the board and management of KAA will consider the proposal on the basis of the guidelines within the PPP Act, which incorporates public participation.

The series of events for stakeholders will be hosted in Kisumu, Eldoret, Mombasa, Wajir, Lodwar and Nairobi beginning Wednesday and will run through to mid-February.

"As one of our most valued stakeholders, it is mandatory and important that we get the views and feedback of all relevant stakeholders in the proposals made by KQ in the PIIP," said Mr Andersen.

He added that due diligence on the state of the KAA and on that of the national carrier was underway as well as evaluation of KQ's proposal.

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