The State House was entangled in a Ksh13.26 billion suit involving a Lebanese tycoon and Kenya Pipeline Company (KPC), the Business Daily reported on Thursday, October 3.
Abdallah Zakhem, a Lebanese businessman, sued KPC after State House froze payment to his construction firm citing cost escalation when the Mombasa-Nairobi pipeline was built.
Zakhem, through his construction company Zakhem International, filed a suit at the High Court seeking payment of $128.8 million owed to him for the construction of the 450-kilometre pipeline.
Zakhem International demanded to be paid Ksh6.9 billion for unpaid works, Ksh6 billion and Ksh267 million as interest over delayed payments.
The suit came after State House blocked KPC from making the payment noting that the cost had been inflated way over the original agreed on price.
“The plaintiff prays for judgment against the defendant for a declaration that the plaintiff is entitled to prompt payment for the sum of Ksh13.26 billion due and outstanding under the agreement,” Zakhem mentioned in court documents.
“The defendant’s willful refusal to pay the sum owing and due to it is high-handed and capricious. No reason was given for the refusal and none exists in law,” Zakhem added.
Petroleum Cabinet Secretary John Munyes commented on the issue by revealing that the Presidency had stopped payment to Zakhem International.
He confirmed that the order came from State House when KPC was at the moment preparing to pay Ksh4.4 million to the construction firm for the four years of delay the project had gone through.
The 18-month project’s tender was won by Zakhem in 2014 with the firm promising to build the pipeline in the set time and at a cost of Ksh48.7 billion.
Zakhem International, however, failed to achieve its target and ended up demanding for more money amid contract delays.
State House intervened after KPC was backed into a corner with contract negotiations and demands for additional billions.
Former KPC Managing Director Joe Sang who quit in December 2018, pushed for the payment but it brought divisions in the firm with some members of the board allegedly needing approval from State House while others wanted a speedy payment process.
If Zakhem succeeds in pushing for the payment the total cost would jump from the agreed construction cost of Ksh48.7 to Ksh61.9 billion.
