Taxpayers to pay Sh4.5bn after Ketraco loses court battle over cancelled power line project
The case stems from the wrongful termination of Inabensa’s contract in April 2016, which halted a major electricity transmission project intended to link Kenya with Uganda, Rwanda, Burundi and the Democratic Republic of Congo.
Kenyans are facing a Sh4.5 billion financial blow after the Kenya Electricity Transmission Company (Ketraco) was ordered to compensate a Spanish contractor for a power line project that was never completed.
The National Assembly’s Public Accounts Committee (PAC) has directed the Energy Principal Secretary and the National Treasury to urgently secure funds to pay Instalaciones Inabensa, the firm at the centre of the failed energy project.
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The decision comes after an eight-year legal battle, during which Ketraco was defeated at every level of the judicial process, from a tribunal to the Supreme Court.
The case stems from the wrongful termination of Inabensa’s contract in April 2016, which halted a major electricity transmission project intended to link Kenya with Uganda, Rwanda, Burundi, and the Democratic Republic of Congo.
Despite the loss, PAC did not recommend that any Ketraco officials be held accountable for the failed contract, which leaves taxpayers footing the entire bill.
Auditor-General Nancy Gathungu has raised concerns about the deal, questioning whether the public gained any value for the billions set to be paid out.
The project, launched under the Nile Equatorial Lakes Programme, was expected to deliver improved electricity access in several Kenyan towns, including Rumuruti, Kabarnet, Narok and Kitui.
But the plans crumbled when the Spanish contractor was declared bankrupt and failed to mobilise necessary resources, forcing work to grind to a halt.
“The contractor has closed the project site and barred access until payment is made,” said Energy Principal Secretary Alex Wachira, adding that Ketraco is seeking new sources of financing to complete the line by 2025-26.
The PAC’s decision adds to a growing list of court awards caused by government agencies' mishandling of contracts.
Treasury records show that pending bills from court decisions stood at over Sh220 billion by December last year.
This is more than double the Sh95 billion recorded just six months earlier in June 2023 and nearly triple the Sh69 billion reported in 2021.
The Ketraco case mirrors a wider pattern of government negligence, where avoidable litigation and poor contract management end up draining public funds. In many cases, payments have been delayed even after court rulings, raising questions about the commitment of various ministries to resolve disputes.
Agriculture-related ministries are the worst offenders, with Sh74 billion in pending awards, including Sh57 billion owed by the Ministry of Agriculture. Other sectors in trouble include the Ministry of Environment (Sh43 billion), Health (Sh40 billion), Governance and Justice (Sh17 billion), Education (Sh7 billion), and Public Administration (Sh8 billion).
The Ministry of Health alone has been ordered to pay Sh32.2 billion to two medical suppliers from cases dating back to the 1990s. Equip Agencies is owed Sh15.2 billion, and United Medical Supplies Sh17 billion, yet payments are still pending.
President William Ruto has repeatedly warned state agencies against entering into contracts that lead to costly legal losses. But the numbers suggest the message has not been fully embraced.
In the transport sector, missteps have also proved expensive. The Kenya Airports Authority paid Sh390 million over a demolition dispute at JKIA, while the highways agency lost Sh800 million to an Israeli contractor after cancelling the Kisumu-Mamboleo road contract.
Taxpayers also lost Sh700 million after the unlawful cancellation of a JKIA expansion project that had already consumed Sh70 million in preparations and ceremonies.
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