Spanish firm sues to salvage Sh17bn Turkana power line deal

Spanish firm Isolux Ingeniera SA has moved to court to try and salvage its Sh17.4 billion deal to construct an electricity transmission line from the Lake Turkana wind power plant to Suswa.

The Kenya Transmission Company (Ketraco) issued Isolux with a termination notice on August 14, barely four months after the firm’s parent company —Isolux Corsan— filed for bankruptcy in Spain.

Isolux claims that the termination notice is unlawful and wants the High Court to suspend Ketraco’s decision until its standoff with the State corporation has been referred to arbitration.

The firm also wants the High Court to block Ketraco from cashing in on bank guarantees totaling over €19.9 million (Sh2.4 billion) that Isolux issued in the State agency’s favour through Bank of Africa, Ecobank Kenya, Ecobank Nigeria and KCB #ticker:KCB.

KCB and Ecobank Nigeria have already paid €14.2 million (Sh1.7 billion) to Ketraco, which Isolux wants the High Court to freeze until its dispute has been resolved.

READ: Kenya Power billed for idle wind farm

ALSO READ: Sh153bn debt forces Turkana wind power line builder into bankruptcy

Isolux adds that it notified Ketraco in July of the bankruptcy proceedings its parent firm filed in Spain, but assured the State corporation that the Turkana-Suswa transmission line’s construction would not be affected.

“Isolux contends that Ketraco’s actions constituted a waiver of its right to terminate the contract under clause 15.2,” Isolux says in suit papers.

Ketraco has filed an objection to the suit, arguing that owing to the bankruptcy proceedings in Spain Isolux needed to seek the Kenyan courts’ permission before filing a case.

Ketraco did not terminate the contract then, and Isolux now says the State corporation’s decision not to do so was a waiver of its right to call off the deal on grounds of the bankruptcy proceedings.