The Kenya Electricity Transmission Company (Ketraco) appears to be on the verge of resolving a longstanding Sh5.1 billion dispute with Spanish contractor Instalaciones Inabensa SA, following a strategic retreat from legal challenges and renewed efforts to de-escalate tensions.
The dispute traces back to the termination of a contract awarded in 2013 to Instalaciones for the construction of a 127-kilometre, 420 kilovolt double-circuit transmission line linking Lessos in Kenya to Tororo in Uganda part of a regional initiative under the Nile Equatorial Lakes Subsidiary Action Programme to interconnect regional electricity networks.
After Ketraco cancelled the contract in 2016 citing non-performance, Instalaciones successfully won an arbitration award in 2019 that ordered Ketraco to pay the contractor more than Sh4.8 billion, including interest, legal, arbitration, and administrative costs.
Ketraco pursued litigation but ultimately lost appeals that challenged the award’s validity. Earlier this year, Kenya’s Supreme Court dismissed attempts to push the dispute further, prompting Ketraco to withdraw its challenge and accept the tribunal’s award. This move opens the path for a formal settlement between the parties.
Ketraco’s withdrawal was justified on grounds that continued litigation would squander judicial time and resources, given the Supreme Court had already ruled it had no jurisdiction to hear the matter.
As part of the claims, Ketraco was ordered to cover not only the principal sum but also interest, legal fees, and arbitration costs bringing the total to at least Sh5.1 billion.
The resolution now shifts to negotiations on the modalities of payment. These will likely involve assessing Ketraco’s fiscal capacity, timelines for disbursement, and mechanisms to mitigate the strain on public finances.
While the arbitration finding favors Instalaciones, the company’s ultimate ability to enforce the award may hinge on Ketraco’s financial stability and adherence to contractual obligations.
The lingering dispute and the expected payout expose broader challenges in managing state infrastructure contracts and highlight the financial risks associated with protracted litigation over terminated deals.
The resolution should it lead to an amicable settlement would bring closure to a nearly decade-old dispute with regional implications for cross-border energy integration.
It may also serve as a cautionary tale for public agencies on the need for due diligence, contract design, and risk mitigation in infrastructure procurement and management.
For now, Kenya’s taxpayers await confirmation of how the settlement will be executed and its impact on both the budget and future regional power transmission initiatives.
Written By Ian Maleve
