Ketraco escapes account seizure in Sh10billion row with a Spanish contractor
The High Court has spared the Kenya Electricity Transmission Company (Ketraco) from the immediate seizure of its bank accounts in a long-running Sh10 billion dispute with a Spanish contractor, Instalaciones Inabensa S.A, offering temporary relief to the State-owned electricity transmission firm while the case continues.
The High Court suspended earlier orders that had allowed the contractor to freeze Ketraco’s bank accounts in an attempt to recover the disputed debt.
Instead, the court directed the power utility to provide a Sh1 billion bank guarantee within 30 days as security pending the determination of an appeal challenging the enforcement of the award.
The dispute stems from a 2013 contract for the construction of the 400kV Lessos–Tororo power transmission line and expansion of the Lessos substation, which was awarded to Spanish contractor Instalaciones Inabensa S.A.
The contract was terminated by Ketraco in 2016 after the company accused the contractor of failing to mobilise and execute the works as required.
Following the termination, the contractor-initiated arbitration proceedings and in July 2019 obtained an arbitral award against Ketraco.
The award was later adopted as a judgment by a Kenyan court in 2021, paving the way for enforcement proceedings that have since escalated into a legal battle over the payment of billions of shillings.
The claim has grown to about Sh10 billion after penalties, interest and legal costs, prompting the contractor to pursue garnishee proceedings targeting several Ketraco accounts held in local banks including KCB, NCBA, Standard Chartered, Co-operative Bank and Citibank.
However, the court ruled that immediately seizing the funds could cripple the operations of the electricity transmission utility, which is responsible for managing Kenya’s high-voltage power transmission network.
Judges noted that the earlier freezing of Ketraco’s accounts had already disrupted key functions such as salary payments, loan servicing, procurement of equipment and maintenance of the national electricity grid.
The court further raised legal concerns regarding the entity currently seeking to enforce the award. The rights to the arbitral award were transferred to another Spanish firm, CA Infraestructuras T & I SLU, after Inabensa entered insolvency proceedings.
The court observed that the foreign insolvency process had not yet been formally recognised under Kenya’s insolvency laws, raising questions about the firm’s legal standing to enforce the decree locally.
As a result, the court ordered the Spanish firm to file an application within 21 days seeking recognition of the foreign insolvency proceedings, warning that failure to do so could invalidate the garnishee orders.
The matter will return to court in about 60 days for further directions, while Ketraco continues pursuing its appeal against the enforcement of the award.
