NAIROBI, Kenya – Kenya’s power sector is set to absorb a heavy financial blow as the Kenya Electricity Transmission Company (Ketraco) has been ordered to compensate a Spanish contractor to the tune of Sh4.5 billion, following a long-running court battle over a power line project that was never completed.
The National Assembly’s Public Accounts Committee (PAC) has directed the Ministry of Energy and the National Treasury to urgently secure the funds needed to pay Instalaciones Inabensa, a Spanish company that had been awarded the contract for the electricity transmission project.
The deal has now become a costly failure, and taxpayers are on the hook for the payout.
The dispute stems from the wrongful termination of Inabensa’s contract in April 2016, which halted a key energy transmission project intended to link Kenya with neighboring countries including Uganda, Rwanda, Burundi, and the Democratic Republic of Congo.
This was part of a broader effort to improve electricity access in Kenyan towns such as Rumuruti, Kabarnet, Narok, and Kitui.
Despite a legal defeat at multiple levels, including at the Supreme Court, the PAC report did not call for accountability from Ketraco officials, meaning taxpayers will foot the entire bill.
Auditor-General Nancy Gathungu has raised serious concerns regarding the deal, particularly questioning whether any real value was gained for the billions that will now be paid to the Spanish contractor.
The project came to a standstill after Inabensa was declared bankrupt and unable to mobilize the necessary resources to complete the work.
The company was unable to fulfill its contractual obligations, and the project site has been closed ever since.
Energy Principal Secretary Alex Wachira acknowledged the contractor’s decision to close the site and bar access, saying that Ketraco was now looking for alternative financing options to complete the power line by 2025-26.
This latest financial setback adds to the growing list of court-ordered payments resulting from poor contract management within government agencies.
Treasury records show that pending bills from legal decisions have soared to over Sh220 billion by December 2024, a sharp increase from Sh95 billion just six months prior.
The Ketraco case is part of a wider pattern of government negligence where avoidable litigation and poor contract management continue to drain public funds.
Ministries, particularly those in agriculture, health, and environment, are struggling with massive pending bills, exacerbating the financial burden on taxpayers.
The Ministry of Health alone has been ordered to pay Sh32.2 billion to two medical suppliers, with payments still pending despite years of litigation.
President William Ruto has repeatedly warned government agencies against entering into contracts that lead to costly legal losses, but these rising numbers suggest that the message has yet to be fully embraced.
