• Abdallah Zakhem, through his construction firm, Zakhem International Construction, is suing Kenya Pipeline Company (KPC).
  • Mr. Zakhem,is seeking prompt payment of $128.8 million that he says is owed for the construction of the 450-kilometre pipeline.
  • State House claims that the cost of building the 450-kilometre pipeline has been inflated way above the agreed Sh48 billion ($480 million).

Kenya Pipeline Company (KPC) is facing a suit of Sh13.26 billion by a Lebanese tycoon over construction of the Mombasa-Nairobi pipeline.

Abdallah Zakhem, through his construction firm, Zakhem International Construction, is suing the state agency after State House froze payment to his construction firm over cost escalation during the building of the pipeline.

Kenya Pipeline Company (KPC)

Mr. Zakhem, who has filed the suit at the High Court, is seeking prompt payment of $128.8 million that he says is owed for the construction of the 450-kilometre pipeline.

“The plaintiff prays for judgment against the defendant for a declaration that the plaintiff is entitled to prompt payment of the sum of $126,255. 812 due and outstanding under the agreement,” Zakhem said in court documents.

The firm is demanding $67 million (Sh6.9 billion) for unpaid works, $59.2 million (Sh6 billion) for delays and $2.6 million (Sh267 million) as interest for delayed payment, pushing the total claim to $128.8 million (Sh13.26 billion).

“The defendant’s wilful 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.”

A file photo of State House Nairobi, the official residence of the Kenyan President

State House on its hand allegedly blocked KPC from making further payments to Zakhem amid claims that the cost of building the pipeline had been inflated way above the agreed Sh48 billion ($480 million).

In July this year, Petroleum Cabinet Secretary John Munyes told the Public Investments Committee (PIC) that the Presidency had stopped payment to Zakhem pending an independent review of the pipeline construction costs.

Petroleum and Mining Cabinet Secretary John Munyes

The order from State House came as KPC was preparing to pay Zakhem Sh4.4 billion ($44 million) to cover the four years’ delay of the project. KPC had already paid the Lebanese firm Sh48.7 billion ($487 million).

Zakhem International Construction won the contract to build the 20-inch pipeline in 2014. It promised to complete the work in 18 months, or on February 9, at a cost of Sh48 billion.

That target was, however, not achieved with Zakhem instead demanding additional billions for the contract delays, triggering a parliamentary investigation and intervention by State House.