Spanish firm fights to retain Sh2.3bn power deal

Instalaciones won a Sh2.3 billion contract to build power lines. PHOTO | FILE
Instalaciones won a Sh2.3 billion contract to build power lines. PHOTO | FILE 

The Kenya Electricity Transmission Company (Ketraco) has been stopped from cancelling a Spanish firm’s Sh2.3 billion contract for the construction of power lines connecting Kenya and Uganda’s national grids.

Justice Olga Sewe has issued an order barring Ketraco from awarding the lucrative tender to any third party following claims by Spain’s Instalaciones Inabensa SA that the State corporation breached terms of the contract before unlawfully backing out of the deal.

Instalaciones has sued the State corporation for cancelling a tender for the grid inter-linking project which is part of a move by the Nile Equatorial Lakes countries to connect their electricity networks for easier power trade with each other.

Instalaciones says that Ketraco refused to make payments and grant it unlimited access to the project sites as agreed in the contract, and that the State corporation has now unlawfully backed out of the deal. The Spanish firm wants the dispute referred to arbitration for determination.

“The prayers (stopping award of the tender to third parties) are hereby granted pending the hearing and determination of this application. The matter is stood over to June 15,” Justice Sewe ordered.

Ketraco is yet to respond to the suit, but Justice Olga Sewe has granted it 14 days to respond to the suit. Justice Sewe has also granted an order barring Ketraco from cashing bank guarantees Instalaciones provided until the Spanish firm’s application is determined.

Instalaciones claims that Ketraco managing director Fernandes Barasa has advertised one of the tenders through an account he runs on social media site LinkedIn.

“Ketraco failed to make payments according to the contracts and also to provide possession of and access of all areas of the sites which constituted a breach of the contracts. Ketraco, clearly with a view to defeat Ketraco’s application, has purported to call the bank guarantees. It is only fair that this court protects Instalaciones by way of an interim measure of protection,” the Spanish firm says.

The contractor wants the judge to ensure the restraining orders are kept in force until an arbitrator has resolved the dispute.

The interlinking of power grids is part of a plan to have countries in the Nile Equatorial Lakes region to easily engage in power trade while stabilising the connected electricity networks. The entire project is expected to cost about Sh5 billion.

Kenya is also in the process of linking its power grid with Tanzania’s and Ethiopia’s.