Equity Bank ordered to pay Sh485million to Zakhem from Kenya Pipeline accounts
In a ruling delivered by Justice Josephine Mongare at the Milimani Commercial and Tax Division, the court found that the state-owned pipeline operator failed to comply with a January 2021 order to pay Zakhem the Sh485million balance after settling its tax obligations with KRA
The Kenya Pipeline Company (KPC) has suffered a major blow after the High Court ordered Equity Bank Kenya to release Sh485 million from KPC’s accounts to Zakhem International Construction Limited, a Lebanese firm, bringing to a close a protracted legal battle over unpaid sums from a 2020 court ruling.
In a ruling delivered by Justice Josephine Mongare at the Milimani Commercial and Tax Division, the court found that the state-owned pipeline operator failed to comply with a January 2021 order to pay Zakhem the Sh485million balance after settling its tax obligations with KRA.
The funds will come directly from the Kenya Pipeline Company’s (KPC) bank accounts.
This ruling ends a long-standing legal dispute involving unpaid dues for pipeline construction work.
The High Court had explicitly directed that the remaining Sh485million, after settlement of the principal taxes, be paid directly to Zakhem.
KPC, however, claimed that the entire amount had been consumed by additional tax demands from KRA, citing an agency notice dated January 7, 2021, for an extra Sh1.35billion, allegedly covering penalties and interest.
Based on this notice, KPC remitted more funds to the Kenya Revenue Authority (KRA) and asserted that nothing remained payable to Zakhem.
In 2014, Zakhem signed a Sh48billion deal to construct the Mombasa-Nairobi oil pipeline. Over time, the firm claimed that KPC failed to pay for completed work.
This sparked a court battle over outstanding payments, penalties, and interest. In 2020, the High Court awarded Zakhem USD 44 million (Sh5.6 billion).
The court instructed KPC to pay taxes to the Kenya Revenue Authority (KRA) and clear part of the debt to Zakhem.
KRA received Sh3.09billion, and Zakhem got Sh915 million. But Sh485 million remained unsettled.
On May 29, 2025, Justice Ngenye Macharia ordered Equity Bank to release Sh485million from KPC’s accounts.
The judge issued a garnishee order, which allows a creditor to collect money directly from a debtor’s bank. The court issued the original garnishee order in 2021. However, KPC challenged the ruling and filed an appeal.
On March 11, 2025, Zakhem withdrew that appeal, clearing the way for the court to enforce payment.
Zakhem first tried to recover the money through Standard Chartered and Stanbic Bank, but those attempts failed. Later, the firm discovered that Equity Bank held enough funds belonging to KPC.
The court issued a fresh garnishee order on April 18, 2025, targeting Equity Bank. KPC opposed the move and asked the court to dismiss the order. But it later withdrew that application, leaving no obstacle for payment.
KPC claims it settled the matter in September 2023 through a consent agreement. It argues that all tax and contractor payments were cleared. But the court disagreed. According to the judgment, the Sh485million wasn’t included in the consent agreement.
So, Zakhem remained within its rights to pursue the money through legal means. The court also noted that Zakhem had earlier attempted to attach an extra Sh926 million, but a separate ruling dismissed that claim.
The current case, however, relates only to the earlier USD 44 million that the court had already awarded.
