Ketraco loses bid to unfreeze accounts in Sh10billion dispute with Spanish contractor
The Kenya Electricity Transmission Company (Ketraco) has suffered a major legal setback after the Court of Appeal declined to lift orders freezing 17 of its bank accounts over a debt exceeding Sh10 billion owed to a Spanish contractor.
The appellate bench, comprising Justices Daniel Musinga, Mumbi Ngugi and George Odunga, ruled that Ketraco had failed to demonstrate it had an arguable case to warrant the suspension of the orders.
The judges upheld an earlier High Court decision aimed at preserving the funds pending determination of the dispute.
“We have perused the grounds of the intended appeal and we agree with Mr Muthui (lawyer representing Instalaciones Inabensa S.A) that nothing bars the applicant (Ketraco) from raising those objections during the hearing of the application for the garnishee order nisi to be made absolute,” Justices Daniel Musinga, Mumbi Ngugi and George Odunga ruled.
The Court of Appeal judges ruled that Ketraco had failed to prove that they had an arguable case.
The High Court had earlier allowed Ketraco temporary relief by lifting the freeze on condition that it provides a Sh1 billion bank guarantee from a reputable Kenyan bank within 30 days.
The court had noted that an outright seizure of the funds risked paralysing operations at the State-owned electricity transmission firm.
Ketraco had argued that the freezing of the accounts—held across multiple banks—had already disrupted its operations, including payment of staff salaries and servicing of critical obligations.
In an affidavit, Company Secretary and General Manager Florence Mitey said the High Court failed to distinguish between project funds, donor funds and monies held in trust for third parties such as project-affected persons awaiting compensation.
The dispute dates back to contracts signed in April 2013 between Ketraco and Spanish firm Instalaciones Inabensa S.A. for the construction of a transmission line and expansion of a substation.
Following disagreements in 2016, the matter was referred to arbitration, which ruled in favour of the contractor, awarding it over €37 million plus legal costs.
Efforts by Ketraco to overturn the award have failed at all levels, including the Supreme Court.
The contractor later transferred its rights to another Spanish firm, C.A. Infraestructuras T&I SLU, which is now pursuing enforcement of the award.
Ketraco warned that the continued freeze could cripple its ability to operate the national transmission grid, meet contractual obligations, and sustain ongoing projects—raising fears of widespread power disruptions.
However, the Spanish firm opposed the application, arguing the matter had been conclusively litigated and that it is capable of refunding the funds should Ketraco’s appeal succeed.
