Kenya Pipeline Company faces lawsuit over Line I Replacement project payments

Kenya Pipeline Company (KPC) is facing a High Court lawsuit from Zakhem International Construction seeking about Sh10.85 billion over alleged unpaid claims and interest on the Line I Replacement Project.

The state-linked firm says it will contest the suit, arguing it has strong legal grounds, while assuring stakeholders that operations and financial position remain stable amid ongoing proceedings.

“The Board of Directors of Kenya Pipeline Company PLC (the ‘Company’ or ‘KPC’) hereby notifies shareholders, the investing public, and all stakeholders of the following development in the affairs of the Company,” it said in a statement issued and signed by Flora Okoth, General Manager (Legal Services) and Company Secretary on June 15, 2026.

The dispute has been filed at the High Court of Kenya, Milimani Commercial Division, under case number HCCOMM E346 of 2026.

The case relates to the Line I Replacement Project, involving procurement, construction, testing, and commissioning works.

ZIC alleges that KPC failed to make payments for extension of time claims and interest on delayed payments, amounting to a substantial financial demand.

“ZIC alleges that KPC has failed to pay them USD 19,036,187.46, being extension of time claims, and USD 65,081,253.70 being interest on delayed payments pursuant to the terms of the Contract. They are therefore seeking to recover a total of USD 84,117,441.16 from the Company.”

KPC, however, has stated that it intends to vigorously defend the case, citing legal advice received from its advocates.

“The Board of Directors (the ‘Board’), based on the information currently available and the preliminary legal advice it has received from the Company’s advocates, is of the view that the Company has credible legal and factual grounds upon which to contest the claim. Consequently, the Company will be defending the proceedings and has instructed its advocates to take appropriate legal measures to safeguard the interests of the Company and its shareholders.”

The company will continue to monitor proceedings and issue updates as required under capital markets regulations.

“The Company will closely monitor the proceedings and will make further announcements as and when material developments arise, in accordance with applicable law and the NSE Listing Rules.”

Despite the litigation, KPC reassured stakeholders that its core operations and financial stability remain unaffected.

“The Board wishes to assure shareholders, partners, and the investing public that this development does not affect the Company’s strategic focus, operational stability, or financial position. The Board and management remain fully committed to delivering long-term value to all stakeholders.”

However, investors have been advised to exercise caution until the matter is resolved.