Kenya to Pay Adani Group Billions in Compensation Following Ksh 96 Billion Contract Cancellation

The Kenyan government is preparing to compensate India’s Adani Group for the cancellation of a multi-billion shilling contract to construct power transmission lines and substations, according to officials at the Treasury’s Public-Private Partnership Directorate.

The government has yet to issue a formal public notice terminating the agreement, opting instead to pursue a mutual settlement to minimize costs. Officials say plans are underway to resolve the matter “in a manner which satisfies all parties.”

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Legal experts estimate Kenya will pay approximately Ksh 5 billion to exit the contract, as the cancellation negotiations were initiated unilaterally by the government. Under the terms of a “Mutual Separation” clause signed in October 2024, Kenya agreed to reimburse the Adani Group for expenses incurred in securing and preparing to execute the contract.

The agreement had tasked the Adani Group with constructing several power infrastructure projects, including the 70-kilometer Rumuruti transmission line, among other installations across the country.

President William Ruto moved to cancel the deal after the Adani brothers were named as persons of interest by the United States government, raising concerns about the company’s international legal standing. The development prompted a swift reassessment of Kenya’s business relationship with the conglomerate.

The compensation arrangement stems from the contract’s structure, which protects the private partner from financial losses in the event of early termination initiated by the government. By pursuing an informal settlement rather than a formal contract cancellation, Kenyan authorities hope to reduce the overall financial burden on taxpayers.

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