A contractual dispute between Kenya Electricity Transmission Company (KETRACO) and a Chinese firm over a Sh2 billion power transmission deal has been referred to binding arbitration.
Instalaciones Inabensa SA alleges KETRACO unlawfully canceled the contract signed to build electricity interconnections between Kenya and Uganda, and a court has barred the agency from awarding the tender to any other party pending resolution.
Legal documents show that KETRACO awarded the contract, valued at roughly Sh2.3 billion, for grid linkage work but later terminated it, prompting the Spanish contractor to seek redress.
Justice Olga Sewe issued an order preventing KETRACO from reallocating the project as Instalaciones pursues claims of breach and seeks enforcement of its rights.
Should the arbitrator rule in favor of Instalaciones, KETRACO and by extension taxpayers could face compensatory liabilities.
Analysts warn the fallout may mirror past cases where contract cancellations led to multibillion-shilling payouts through arbitration and court enforcement.
The case underscores recurring governance weaknesses in State procurement and exposes the financial risks tied to abrupt contract terminations. With arbitration underway, market watchers are closely monitoring outcomes amid concerns over fiscal exposure.
Written By Ian Maleve
