Musings From Abroad

India’s Adani sets up Kenyan unit amid lobbying for JKIA deal

Published

4 months ago

September 2, 2024

Adani Enterprises has established a Kenyan unit as it intensifies its bid to take over Jomo Kenyatta International Airport, despite ongoing opposition from transport workers.

According to a registration with the National Stock Exchange of India in Mumbai, Gautam Adani’s enormous corporate giant’s main company, “Airports Infrastructure PLC (AIP)” was formed in Kenya on August 30.

“AIP is incorporated to take over, operate, maintain, develop, design, construct, upgrade, modernise and manage the airports,” the filing reads.

The Kenyan subsidiary was established by an Abu Dhabi entity called Global Airports Operator, which is a subsidiary of Adani Enterprises and would own 100% of AIP’s share capital. As part of the Kenyan company’s establishment, Adani issued a share capital of Ksh6.75 million, divided into 6,750 shares of Ksh1,000 each.

While Adani stated that AIP has yet to begin operations or generate money, the establishment of a Kenyan airport subsidiary demonstrates its continuous commitment to the JKIA takeover, even as domestic opposition to the plan develops.

Kenya Airports Authority staff went on strike at JKIA on Monday to oppose Adani’s proposal to take over the airport, citing concerns over job security.

Adani filed a privately initiated proposal (PIP) with the Kenya Airports Authority (KAA) earlier this year to run JKIA on a 30-year concession. Adani’s financial plan indicates that $750 million will be spent on the construction of a new terminal building, related apron and taxiway system, and two quick departure taxiways. This is expected to be completed in 2029.

A further $92 million would be spent on improving the taxiway system, adding two more rapid exit taxiways, and building other relevant amenities such as more remote aircraft parking stands.

This phase is projected to be completed by 2035. Adan plans to invest $620 million in new facilities, with careful consideration for seamless integration with current infrastructure.

The Indian corporation proposes a city-side development with hospitality, business hubs, and other amenities for travellers and city inhabitants.

The corporation plans to manage the airport for 30 years before returning it to JKIA at a mutually agreed-upon value, resulting in an 18% internal rate of return on equity.IRR is a financial research statistic that estimates the profitability of possible investments. An investment with the highest likely IRR is deemed the best.

During the 30 years, Adani will be able to set dollar-denominated prices to airlines and other customers for its services at JKIA in a way that ensures an 18% IRR. Adani predicts that the JKIA upgrade will increase revenues from $163 million in 2025 ($47 million to the government) to $290 million in 2030, with the government receiving $52 million.

Revenue is projected to increase to $740 million in 2045, with the government contributing $70 million. By 2054, it will reach $1.2 billion, earning the state $76 million. JKIA’s existing Terminal 1 is divided into five segments with a total built-up area of approximately 70,000 square metres. The airport also features another 10,000-square-metre terminal, T2, for low-cost carriers.

Projections in the Adani proposals show that JKIA will handle 33 million people and one million tonnes of cargo by 2055, up from roughly eight million passengers and 0.5 million tonnes of cargo at the end of 2023.

Musings From Abroad

World Bank doubts Ethiopia-IMF debt assessment

Published

14 hours ago

December 24, 2024

Ifeoluwa Dada

Some officials of the World Bank have questioned if the study supporting Ethiopia’s debt restructuring may be “faulty” after criticising an evaluation of the country’s finances done with the International Monetary Fund (IMF).

World Bank consultant, Brian Pinto, and its head economist, Indermit Gill, evaluated the July Debt Sustainability Analysis (DSA), which was created by the IMF and employees of the International Development Association (IDA), the World Bank’s fund for the world’s poorest countries, in an internal document seen by Reuters.

According to the authors, Ethiopia is experiencing a short-term cash shortage rather than a long-term solvency problem, which is a source of conflict between the government and holders of its $1 billion international bond that is in default, based on the DSA.

“We found that the bondholders have interpreted the DSA correctly, but the DSA itself may be faulty,” Pinto and Gill wrote in the paper from earlier this month. “The disagreements about Ethiopia’s debt sustainability will be repeated as other countries become debt distressed.”

A World Bank representative responded to a question regarding the paper by saying, “We generally don’t comment on internal deliberations between the World Bank and the IMF or any of our partner institutions.”

As part of the most recent review of the Fund’s loan program, Ethiopian State Finance Minister Eyob Tekalign told Reuters that the DSA had just been reviewed by IMF and World Bank teams and that the status had not changed significantly.

Without providing further details, an IMF representative acknowledged that its officials travelled to Ethiopia in November for the second review of the Fund’s loan program and added that every review incorporates an update to the DSA. Regarding the memo, the spokeswoman remained silent.

A request for comment from Pinto and Gill was not answered. There has been a tense confrontation between Ethiopian officials and bondholders.

The main point of contention is whether, as bondholders contend, Ethiopia is experiencing a liquidity shortage that may be resolved by rescheduling debt or if it is experiencing longer-term financial issues that necessitate haircuts, or debt write-downs.

According to the DSA, certain statistics on exports indicated pressures on both liquidity and solvency.

It was reported in October that the DSA indicated a solvency problem and that writedowns were inevitable. Investors have criticised a government proposal that suggests an 18% haircut in addition to rejecting the evaluation.

Musings From Abroad

Swiss company Mercuria partners Zambia’s IDC in new metals trading firm

Published

4 days ago

December 21, 2024

Ifeoluwa Dada

According to a statement released by Swiss commodities trader, Mercuria, on Thursday, it has established a metals trading arm with Zambia, the second-largest producer of copper in Africa.

The trading unit is jointly owned by Mercuria and an arm of Zambia’s Industrial Development Company (IDC), and its purpose is to allow Zambia to engage directly in the minerals trading market.

The joint venture “envisages the establishment of a vehicle to market and trade Zambian copper by mutual leverage,” according to a statement from Cornwell Muleya, the CEO of IDC.

The southern African nation wants to increase copper output to roughly 3 million metric tonnes within the next ten years, and in 2023, it produced roughly 698,000 tonnes of copper, down from 763,000 metric tonnes the year before.

In June, the Zambian government announced that it would establish a minerals trading unit.

Investors including First Quantum Minerals and Barrick Gold are ramping up production, with output set to receive a further boost once Vedanta Resources’ Konkola Copper Mines restart activity.

“Our joint venture with IDC marks a significant milestone for Zambia as it positions itself more strategically in the global minerals market,” Kostas Bintas, Mercuria’s global head of metals and minerals, said in the statement.