Kenyan taxpayers are on the verge of losing Sh5.1 billion to a Spanish firm contracted by the state-owned Kenya Electricity Transmission Company (Ketraco) to construct an electricity line linking local and Ugandan power grids.
Ketraco has withdrawn its appeal to the Supreme Court to overturn a Court of Appeal’s order to pay the foreign contractor, Instalaciones Inabensa S.A, the amount for breach of the contract financed by an African Development Bank loan.
Lydia Wanja, Ketraco’s manager for legal services, told judges that the apex court having substantially pronounced itself, in its ruling delivered on October 7, 2022, on the dispute, the state corporation saw no need to pursue the appeal. In the said ruling, the apex court said it lacked jurisdiction to hear and determine the appeal. It had also found that the appeal was not arguable. Hence, she said, “there is nothing left to be determined”. She also contended that it would be a waste of precious judicial time and resources to pursue the appeal.
A three-judge bench of the Supreme Court—justices Mohammed Ibrahim, Isaac Lenaola, and William Ouko—allowed the withdrawal application and ordered Ketraco to bear the costs of the appeal. The withdrawal marks the end of a four-year legal battle that started before an arbitrator in 2019 and escalated to the High Court, the Court of Appeal, and the Supreme Court.
‘Tedious litigation’
In response to the withdrawal application, the Spanish contractor said Ketraco had put it through painstaking litigation before the High Court and the Court of Appeal with the intent to unsuccessfully set aside the arbitral award dated July 30, 2o19.
Ketraco, which was incorporated on December 2, 2008, had entered into two contracts with the Spanish firm for the construction of an electricity transmission line and extension of an existing substation at Lessos in Rift Valley in April 2013. The contractor was to construct a 127-kilometre 420-kilovolt double circuit line from Lessos to Tororo in Uganda with a capacity of 1,200 megawatts. The project was part of the electricity network meant to link Kenya to Uganda, Rwanda, Burundi, and the eastern part of the Democratic Republic of Congo under the Nile Equatorial Lakes Subsidiary Action Programme.
In April 2016, Ketraco terminated the contracts over what it termed “non-performance”, leading to a dispute that was referred to arbitration. The Spanish firm then obtained a court order that delayed the hiring of a new contractor. The arbitral tribunal, comprising Stanley Kebathi, Justice Joseph Nyamu, and Kariuki Muigua, unanimously made a decision in favour of the contractor and ordered Ketraco to pay it €30,887,820.39 (Sh4,140,554,503.69) and interest of €6,477,870.77 (Sh868,367,422.90).
In addition, the tribunal condemned Ketraco to shoulder the legal costs (Sh102,165,144), arbitrators’ costs (Sh83,520,000) and administrative costs Sh2 million. The arbitral award was issued on July 30, 2019, and published on August 26, 2019. Dissatisfied with the award, Ketraco filed an application in court dated November 20, 2019, in which it asked the High Court to set aside the award.
After losing the first attempt to offset an arbitration claim at the High Court in February 2021, Ketraco asked the Court of Appeal to suspend the execution of the orders of Justice Maureen Odero.“The contractor is a foreign company, has no known assets or physical place of business within Kenya and is of questionable liquidity as its parent company, Abengoa SA, has filed for a Voluntary Declaration of Bankruptcy in Seville, Spain,” it informed the appellate court. BY DAILY NATION