News

State firm to pay Sh2.5 billion for stalled project

The Government will have to pay a Spanish company Sh2.5 billion to end a dispute that has stalled installation of a power transmission line in western Kenya. Kenya Electricity Transmission Company (Ketraco) will incur the unnecessary expense for terminating Inabensa Company’s contract to avoid a potentially costly legal battle.

Legal experts have warned that the State Corporation could end up paying more if the matter ends up in court.

Ketraco told a parliamentary watchdog committee that the outgoing Attorney General Githu Muigai had advised them to “amicably” settle the dispute to unlock the project, which they terminated in 2016.

And despite admitting before the Public Investment Committee that the Spanish company had done just “a part” of the works, Ketraco said they would have to pay them the Sh2.5 billion to vacate the court case and allow them to proceed with the project.

“The Attorney General has advised that the dispute be settled amicably to avoid a protracted and expensive arbitration process. Ketraco requires Euro 22 million to settle certified works done by Inabensa; this would allow the court to dispense with the case and enable the company to procure a new contractor to complete the work,” said Ketraco Managing Director Fernandes Barasa (pictured).

Inabensa has continued to hold Ketraco hostage over the project after the contractor challenged their decision to terminate their contract on the basis of non-performance.

The Spanish company further obtained court orders stopping the State Corporation from accessing the site and hiring a new contractor to complete the mega project until a final settlement is reached.

Barasa told the committee, chaired by Mvita MP Abdulswamad Nassir, they have to pay the contractor so that they can access the site, evaluate the work and procure a new contractor.

Another dispute

But MPs were dissatisfied by Ketraco’s failure to disclose some aspects of the contract, prompting the PIC chairman to direct them to furnish the committee with a copy of the contract, and all documentations leading to the termination of the contract in April 2016.

Ketraco also revealed that it has another dispute with Iberdrolla, another Spanish firm, at the Arbitration Court in the UK after it terminated their contract for construction of the Nairobi ring project. The project is a 102km transmission line traversing Kajiado County and four substations at Isinya and Kamuka in Kajiado, Athi River in Machakos and Komarock.

By: Moses Njagih

Source: standardmedia.co.ke

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