The High Court has rejected a request by a Chinese contractor to compel the Kenya Electricity Transmission Company (Ketraco) to set aside Sh570 million pending arbitration in a dispute where the service firm is pursuing Sh1.5 billion compensation over delays in the Kenya-Tanzania power interconnection project.
The High Court, however, ordered Ketraco to appoint an arbitrator within seven days to resolve the dispute with North China Power Engineering Company Ltd (NCPE), warning that the contractor would be free to appoint one unilaterally if the State corporation fails to comply.
The ruling clears the way for arbitration in a payment row arising from one of East Africa’s flagship regional power projects, which links electricity grids of Kenya and Tanzania and enables cross-border electricity trade.
NCPE is seeking compensation from Ketraco for ‘idle time’ following delayed implementation of the project.
‘Idle time’ is an amount paid as compensation for the time a contractor’s employees or machines remain unproductive due to factors that can either be controlled or uncontrolled by the contracting party.
The Chinese firm wants to be paid for losses it says arose after the project was delayed for several years despite an initial completion target of December 2018.
The company claims the delays left equipment and workers idle, increased insurance and administrative costs, and triggered other expenses that it says Ketraco should reimburse.
Court records show the contractor sought an order requiring Ketraco to deposit $4.4 million (Sh570 million), into a joint interest-earning account operated by lawyers representing both sides pending determination of the dispute.
The company argued that Ketraco had already acknowledged that amount as an undisputed portion of its claim.
But the court declined the request, finding that a similar application had already been considered and rejected when the dispute was first referred to arbitration last year.
‘The applicant has not demonstrated any material change of circumstances since that ruling,’ the court said.
‘The assertion that the respondent (Ketraco) acknowledged an amount of $4.4 million does not, without more, establish a basis for requiring the respondent to deposit that sum into a joint account.’
The court further held that such an order would effectively secure the contractor’s monetary claim before an arbitral tribunal had determined liability.
‘Such an order would, in substance, amount to securing the applicant’s monetary claim before liability has been determined by the arbitral tribunal,’ the court ruled.
The dispute stems from a contract awarded to NCPE for construction works under the Kenya-Tanzania Power Interconnection Project.
The project involved construction of about 510 kilometres of high-voltage transmission lines linking the two countries.
The contractor says the contract was expected to be completed in December 2018 but suffered repeated delays that pushed completion to 2023 through a series of extensions.
NCPE argues that the delays were largely caused by difficulties in acquiring wayleaves needed for construction of transmission infrastructure.
Its lawyers told the court that the company had documented losses arising from idle equipment, idle workforce, office maintenance costs, management overheads, insurance premiums, bank guarantees and related expenses incurred during the prolonged delay period.
The contractor also accused Ketraco of frustrating the commencement of arbitration despite a court order issued in July 2025.
The court noted that NCPE had written several letters seeking appointment of an arbitrator after the matter was referred to arbitration.
Ketraco did not dispute receiving the correspondence but said it was undertaking a verification exercise intended to narrow issues before arbitration.
The court found that nearly nine months had elapsed since the court directed the parties to appoint an arbitrator.
“The respondent has failed to cooperate in the appointment process within a reasonable time,” the judge said.
The court ordered Ketraco to select an arbitrator from names proposed by the contractor within seven days. If it fails to do so, NCPE will be at liberty to appoint an arbitrator whose appointment will be deemed valid for the commencement of the proceedings.