Kenya Pipeline refutes claims of overpayment in a construction deal

The Kenya Pipeline Company (KPC) has winnowed out allegations published in a local newspaper that it paid an extra Sh40 billion in a pipeline construction deal.

In a statement, KPC clarified the instances surrounding the construction of the Mombasa-Nairobi petroleum products pipeline, which began with an open international tender on March 2014.

The tender, according to the company was awarded to Zakhem International Construction Limited, to procure, construct, and commission the Line Replacement project.

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” KPC has not, and does not intend to pay ‘Kshs 40 billion extra’ as insinuated in the unfortunate article. ALL amounts paid by KPC have been rightly determined to have been due and owing to Zakhem in strict accordance with the contract dated 1st July, 2014 between KPC and Zakhem as read together with the Public Procurement and Disposal Act 2015 and the applicable regulations of 2016,” read the stament.

KPC highlighted that the dispute at the center of the allegations arose from Zakhem International and its financier, Ecobank, over credit facilities.

This dispute led to legal battles, including a suit filed by Ecobank against Zakhem.

Further, KPC added that it was not a party to these credit arrangements but was drawn into the legal dispute due to its contractual relationship with Zakhem.

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KPC noted that the only funds it was holding from the contract were USD 31,308,249.80 (Sh4,030,937,161) contrary to the claims made in the publication.

KPC further noted that despite various attempts by a third party, Oilfields Engineering Limited, to intervene in the legal proceedings, the High Court dismissed these applications.

The court reaffirmed that KPC was bound by the original orders to pay the funds to Ecobank, as ruled by Justice Mary Kasango in 2018.