Kenya Power has been taken to the International Court of Arbitration in London over a decision to cancel two contracts in the inaugural project of the Last Mile Connectivity.
M/S AEE Power took Kenya Power to the London-based court after cancellations of its two projects whose value remains undisclosed. Kenya Power had extended the deadline by 21 months to June 2019 before it revoked the deals.
Disclosures by the African Development Bank (AfDB) show that the case was filed last year, as the pan-African energy company sought compensation from Kenya Power for termination of its contracts.
The Last Mile Connectivity programme is jointly funded by the AfDB, World Bank, Agence Française de Développement (AFD) and the National Treasury.
M/S AEE Power is one of the firms that was tapped by Kenya Power to build lines and connect millions of households to electricity under subsidised rates.
Kenya Power rolled out the Last Mile Connectivity programme in 2015 with the target of connecting millions of households to electricity at subsidised rates of Sh15,000.
“The two contracting parties (KPLC and AEE Power) are in disputes and the contractor has now escalated the matter to the International Court of Arbitration, the Chartered Institute of Arbitrators in London,” AfDB says in a report released last month.
“KPLC has filed its response and counter claims. The arbitration proceedings were scheduled and held from 16th to 27th October 2023. The outcome of the case is being awaited.”
On its website, M/S AEE Power says that it built a total of 6,349 kilometres of low-voltage power lines, connecting 54,000 households to electricity in the two contracts that were later cancelled.
The International Court of Arbitration, the Chartered Institute of Arbitrators in London offers administration of arbitration and other alternative dispute resolution mechanisms, regardless of the location and law of the involved countries and firms.
The disclosures further show that Kenya Power cancelled the contracts for ‘non-performance’, prompting M/S AEE Power to seek redress in the Kenyan courts.
M/S AEE Power then escalated the matter to the London-based court after it was dissatisfied with the rulings from the Kenyan courts.
Kenya Power stands to take a hit in case the court rules to have M/S AEE Power compensated, in what would eat into the State-owned electricity distributor’s cash reserves.
Last Mile Connectivity entered its fourth phase last month when Kenya Power signed 26 deals with local, Chinese and Indian firms to link 280, 000 homes to power.
The project has helped increase the number of Kenya Power customers to slightly above 9.2 million from 2.3 million connections in 2013.
