Government faces Sh4.5 billion fine as Ketraco loses power line case

Kenya Electricity Transmission Company (Ketraco) is facing a Sh4.5 billion payout to a Spanish contractor over an abandoned power line project, raising concerns about weak oversight and accountability in government contracting.

The Public Accounts Committee (PAC) has instructed the Energy Principal Secretary and the National Treasury to immediately process the payment to Instalaciones Inabensa, following a decisive court ruling in the contractor’s favour.

The PAC’s move comes after Inabensa won a protracted legal battle over its contract, which Ketraco cancelled in April 2016.

The cancellation led to the collapse of a regional power transmission line meant to connect Kenya with neighbouring countries and improve power supply in several Kenyan towns.

Although the Auditor General warned that taxpayers may not have received any value for the money, the PAC did not call for sanctions against Ketraco officials.

Instead, the company has been left to seek new financing to settle the award and potentially resume the project.

"The contractor has closed the project site and barred access until payment is made," said Energy Principal Secretary Alex Wachira.

He noted that efforts are underway to revive the stalled transmission line by the 2025-26 financial year.

The court ruling marks a significant loss for the state in a case that moved through all levels of Kenya’s legal system, ending with a Supreme Court decision in favour of Inabensa.

The firm’s bankruptcy in Spain and inability to mobilise resources had stalled progress, but Ketraco’s termination of the contract was deemed unlawful, opening the door for the costly compensation.

This is not an isolated case. Government ministries and agencies are struggling under a mountain of court awards, many of which stem from cancelled projects, labour disputes, or flawed procurement processes.

Treasury figures show that pending bills from such cases surged to more than Sh220 billion by December 2024.

The Agriculture Ministry tops the list with Sh57 billion in outstanding court awards.

Other affected sectors include Environment (Sh43 billion), Health (Sh40 billion), Governance and Justice (Sh17 billion), Education (Sh7 billion), and Public Administration (Sh8 billion).

Many of the cases have remained unresolved for years, with ministries failing to honour court decisions.

Some of the most shocking examples include the Health Ministry’s delay in settling Sh32.2 billion owed to two suppliers from cases dating back to the 1990s.

Meanwhile, only Sh595 million of the total court-awarded amounts had been paid by the time of the latest Treasury report.

The transport sector has also been hit hard by poor contract handling.

Kenya Airports Authority paid Sh390 million following a demolition-related dispute at JKIA.

Similarly, the roads agency lost Sh800 million after the Kisumu-Mamboleo road project collapsed due to a cancelled deal with an Israeli contractor.

In a particularly costly mistake, taxpayers lost Sh700 million when the government terminated a JKIA second runway project after spending Sh70 million on a launch ceremony.

The contractor successfully sued, and the payout was finalised late last year.

Despite repeated warnings from President William Ruto to avoid litigation-prone agreements, public agencies continue to make decisions that result in huge financial losses.

Without clear consequences for the officers responsible, the risk of repeating such blunders remains high.

As billions of shillings continue to be paid out due to contract mismanagement, calls are growing louder for reforms that will enforce accountability and protect public funds from further waste.