Kenya Pipeline Vows to Fight Shs 309 Billion Contractor Lawsuit

Kenya Pipeline Company (KPC) has vowed to vigorously defend itself against a lawsuit seeking more than Shs 309 billion, insisting it has strong legal and factual grounds to challenge claims brought by contractor Zakhem International Construction Limited (ZIC). In a cautionary announcement to shareholders and investors, KPC disclosed that ZIC had filed a case before the High Court of Kenya seeking USD 84.17 million (KES 10.87 billion) over the Line 1 Replacement Project linking Mombasa and Nairobi. The contractor alleges that KPC failed to settle contractual claims arising from the procurement, construction, testing and commissioning of the pipeline. ZIC is seeking USD 19.04 million in alleged unpaid extension-of-time claims and USD 65.08 million in interest on delayed payments. However, KPC rejected the allegations, saying its board had reviewed the matter and received preliminary legal advice indicating that the company has a credible case. The dispute involves one of East Africa’s most important fuel transport projects. The Mombasa-Nairobi pipeline forms part of the supply chain that serves not only Kenya but also regional markets including Uganda, Rwanda, South Sudan, Burundi and eastern Democratic Republic of Congo. The amount being claimed is substantial. At KES 10.87 billion, it is equivalent to about 145 percent of KPC’s FY2025 profit of KES 7.49 billion, around 28 percent of annual revenue of KES 38.6 billion, and roughly 6.6 percent of the company’s market capitalization of KES 165 billion. Despite the size of the claim, KPC sought to reassure investors that the litigation would not affect its operations, financial position or strategic plans. The Board and management remain fully committed to delivering long-term value to all stakeholders, the company said. KPC said it would continue monitoring the proceedings and provide further disclosures in line with Kenya’s capital markets regulations as the case progresses through court.

(Source：Chimpreports)