NAIROBI, Kenya — Kenya Pipeline Company (KPC) is facing a lawsuit seeking more than Sh10.89 billion from contractor Zakhem International Construction (ZIC) over claims arising from the Line 1 Replacement Project.
In a cautionary announcement issued on June 15, 2026, the state corporation disclosed that Zakhem had filed a case before the High Court in Nairobi, registered as HCOMM E346 of 2026: Zakhem International Construction Limited vs Kenya Pipeline Company PLC.
According to KPC, the dispute relates to the contract for the procurement, construction, testing, and commissioning of the Line 1 Replacement Project, a strategic infrastructure undertaking designed to enhance the transportation of petroleum products across the country.
Zakhem alleges that KPC failed to settle claims amounting to USD 19.04 million linked to extension-of-time costs incurred during the execution of the project. The contractor is also seeking USD 65.08 million in interest for alleged delayed payments under the contract.
The combined claim stands at USD 84.12 million, equivalent to approximately Sh10.89 billion at current exchange rates.
In its statement, KPC said its board had reviewed the matter and obtained preliminary legal advice, concluding that the company has strong grounds to contest the claims.
“The Board, based on the information currently available and the preliminary legal advice it has received from the Company’s advocates, is of the view that the Company has credible legal and factual grounds upon which to contest the claim,” the notice stated.
The company added that it has instructed its lawyers to defend the proceedings and take all necessary measures to protect the interests of the company and its shareholders.
KPC further sought to reassure investors and stakeholders that the litigation does not affect its operations, strategic direction or financial stability.
“The Board wishes to assure shareholders, partners, and the investing public that this development does not affect the Company’s strategic focus, operational stability, or financial position,” the company said.
The cautionary announcement was issued in line with Nairobi Securities Exchange listing requirements, which obligate listed companies to disclose material developments that may influence investor decisions.
As the case proceeds through the courts, KPC said it will continue monitoring developments and provide updates whenever significant milestones arise.
The cautionary notice was signed by Flora Okoth, KPC’s General Manager for Legal Services and Company Secretary, on behalf of the Board of Directors.
