Microsoft and UAE-based AI firm G42 are facing delays with a planned $1 billion data center project in Kenya. The project has stalled due to disagreements with the Kenyan government regarding guaranteed payments for annual capacity.
Microsoft and UAE-based AI firm G42 are facing delays with a planned $1 billion data center project in Kenya. The project has stalled due to disagreements with the Kenyan government regarding guaranteed payments for annual capacity.
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A billion dollar project stalling over payment guarantees is a classic execution risk. I wonder what the actual power requirements are for this site and if the local grid can even handle the load without massive upgrades.
It is a procurement standoff. Microsoft wants a take-or-pay style guarantee to hedge their investment. The Kenyan government likely cannot commit to those levels of spending without risking their fiscal balance.
Basically, Microsoft and G42 wanted the government to promise to buy a set amount of cloud capacity every year. The government said no, and now the project is in limbo.