Lebanese construction firm Zakhem International Construction Limited has sued the Kenya Pipeline Company (KPC) seeking more than Sh10.9 billion, accusing the state corporation of failing to settle outstanding dues arising from the construction of the Mombasa–Nairobi oil pipeline replacement project.
In a suit filed before the High Court's Commercial and Tax Division, the contractor claims KPC owes it over Sh10.9 billion, comprising compensation for project delays and accrued interest resulting from what it describes as persistent breaches of the contract by the corporation.
Zakhem says it was awarded the multi-billion-dollar contract in 2014 and commenced work in January 2015, but the project was hampered by delays allegedly caused by KPC, forcing the company to incur substantial additional costs.
According to the plaint, KPC's actions led to prolonged disruptions, delayed approvals, redesigns and interruptions that affected the contractor's ability to complete the works within the agreed timelines.
"The delays and disruptions were caused by acts and omissions attributable to the defendant," Zakhem states in court papers, adding that it was compelled to seek extensions of time and additional compensation under the contract.
The firm argues that despite completing the project and obtaining certification from KPC, the corporation has failed to honour its payment obligations.
Zakhem notes that KPC issued a certificate of substantial completion in January 2018 and later a Defects Liability Certificate confirming satisfactory completion of the works.
"The Plaintiff duly executed and completed the works in accordance with the contract and remains entitled to payment of the outstanding sums certified and claimed," the company says in the suit.
The contractor further claims that KPC's failure to settle the disputed amounts forced it to secure financing facilities worth $127.5 million (Sh16.5 billion) to sustain project operations, exposing it to massive interest charges.
In the court filings, Zakhem accuses KPC of repeatedly assuring it that the debt would be settled, including after the company's planned Initial Public Offering, only for the payments to remain outstanding.
"The Defendant has neglected, refused and/or failed to settle the plaintiff's lawful claims despite numerous demands and engagements," the plaintiff states.
The Lebanese firm is seeking $19 million (Sh2.46 billion) in compensation for extension-of-time claims and $65 million (Sh8.43 billion) in accrued interest, together with further interest until payment in full, costs of the suit and any other relief the court may grant.
KPC had not filed its response to the case at the time of filing.
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