The High Court of Kenya has referred a Sh2.18 billion contractual dispute between state-owned Kenya Electricity Transmission Company (Ketraco) and China-based North China Power Engineering Company to arbitration.
The case stems from disagreements over the delayed implementation of the Kenya–Tanzania Power Interconnection Project, a critical transnational infrastructure initiative aimed at enhancing regional power trade and stabilizing East Africa’s energy supply.
Justice Peter Mulwa, ruling on July 16, 2025, declined to issue restraining orders against Ketraco as requested by the Chinese firm. He argued that doing so would hinder a vital infrastructure project that holds significant public interest and implications for Kenya’s energy security.
The Chinese contractor had sought to prevent Ketraco from dealing with the project, citing unresolved financial claims. According to court filings, the contractor demanded that Ketraco deposit Sh4.91 billion (Sh3.4 billion in contractual dues and Sh1.54 billion in interest) as security ahead of the arbitration. The contractor also urged the court to supervise the arbitration process.
Ketraco, however, opposed the move, arguing that the contract already included a clear dispute resolution framework. The firm expressed concern that handling the matter in multiple courts could cause confusion and harm Kenya’s judicial image.
Through its legal counsel Firm of MMA advocates LLP, Ketraco stated, “The defendant will be greatly prejudiced if this suit continues before the High Court, as it amounts to a multiplicity of suits in different jurisdictions.”
Justice Mulwa emphasized that there was no imminent threat to the arbitration and no demonstrable irreparable harm to the Chinese firm if the matter proceeded through arbitration. He ordered both parties to appoint an arbitrator under the rules of the Chartered Institute of Arbitrators of Kenya to begin formal proceedings.
The dispute centers on the 510-kilometre High Voltage Alternating Current (HVAC) transmission line linking Kenya to Tanzania. The initial contract, valued at Sh13.3 billion, was signed in February 2018 and was expected to be completed by December 2018. However, the project faced multiple delays and was rescheduled several times, with the latest completion date set for December 31, 2023.
Following the revisions to project timelines and costs, the contract sum was increased to Sh22.43 million and later to Sh3.34 billion, inclusive of tax adjustments and administrative costs. The Chinese firm alleges that Ketraco failed to honor some financial obligations and to approve legitimate claims submitted under the agreed contractual terms.
Sources at the Ministry of Energy have confirmed that the Kenya-Tanzania Interconnection Project is a priority under the East African Power Pool initiative. Once operational, the line is expected to stabilize power supply in Kenya and facilitate electricity exchange with neighboring countries, including Uganda and Rwanda.
The case underscores the growing legal complexities in transnational infrastructure projects involving foreign contractors and state-owned enterprises. The arbitration process is now expected to begin in the coming weeks under Kenyan jurisdiction.
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