The High Court has cleared the way for a Spanish company, C.A. Infraestructuras T and I SLU, to pursue liquidation of Kenya Electricity Transmission Company (Ketraco) over an unpaid Sh10 billion award, rejecting the State agency’s attempt to stop the case.
The court dismissed Ketraco’s preliminary objection, ruling that government ownership does not automatically exempt the electricity transmission company from insolvency proceedings or require Cabinet approval before a creditor files a liquidation petition.
The dispute stems from two contracts awarded in April 2013 to Spanish contractor Instalaciones Inabensa SA for construction of the 400-kilovolt Lessos-Tororo transmission line and extension of the Lessos substation.
The projects were intended to support electricity trade between Kenya and neighbouring countries.
Ketraco terminated the contracts on April 25, 2016, after a dispute over payments and performance. Inabensa challenged the termination through arbitration, where the tribunal found Ketraco in breach and awarded the contractor pound 37.37 million (Sh5.4 billion), plus interest, in 2019. The company was also awarded costs of Sh102 million in legal fees, Sh83.5 million in arbitral costs and Sh2 million in administrative expenses.
The award was recognised and enforced by the High Court in February 2021. Ketraco challenged it through the courts, including the Court of Appeal and the Supreme Court, but failed to overturn the decision.
The claim subsequently grew to pound 62.67 million (Sh10 billion) and Sh195.31 million as at February 2024, excluding further interest, according to a November 2025 High Court ruling.
The current liquidation petition was filed on May 8, 2024, by C.A. Infraestructuras T and I SLU, which says it acquired the rights to the award from Inabensa through a deed of subrogation dated July 28, 2023.
Right creditor contest
But the identity of the rightful creditor remains contested, exposing a complication in a dispute over who should receive the money and whether payment to one claimant could trigger further claims.
In its objection, Ketraco argued that the liquidation petition was sub judice because a separate case concerning enforcement of the same award remained pending. It also challenged the Spanish company’s standing and said liquidation required Cabinet approval under laws governing State corporations and public finances.
“The creditor lacks locus standi under section 974 of the Companies Act and the Fifth Schedule to the Insolvency Act that as a State Corporation, the Debtor cannot be liquidated without Cabinet approval under sections 27(b) and 28 of the State Corporations Act and section 86(1) of the Public Finance Management Act,” the government lawyers argued.
The court declined to resolve the overlap between the proceedings at this stage, saying the parties disputed both the subject matter and the identity of the creditor.
‘The record discloses deep contestation over both the subject matter of the two proceedings and the identity of the parties, particularly the creditor,’ the judge said.
The court also rejected Ketraco’s argument that a foreign company must be registered locally to sue in Kenya. Justice Mugambi said the question was whether the claimant had a genuine stake in the dispute, rather than whether it was registered to conduct business locally.
No insolvency immunity
On Ketraco’s public status, the court found that the company remained subject to the Companies Act and Insolvency Act because no law expressly exempted it from the general insolvency regime.
‘This court cannot create by implication an immunity that Parliament chose not to enact,’ the judge said, leaving the liquidation petition alive.
The court also found that section 86(1) of the Public Finance Management Act did not make Cabinet approval a precondition.
‘It neither ousts the court’s jurisdiction nor makes Cabinet approval a precondition to a creditor’s petition,” said the judge.
The court noted that the original decree holder was Instalaciones Inabensa SA, while C.A. Infraestructuras claimed to have succeeded to its rights through a July 28, 2023 deed, a Spanish court order dated April 18, 2023, and recognition of that order by Justice Rutto on June 25, 2026.
Ketraco had also argued that the company is a stranger to the award whose claim has never been recognised.
But the court said the competing positions could not be reconciled without evidence and left the questions for determination at the hearing.
‘These positions cannot be reconciled without evidence,” said the judge. She further held that the disputed questions remained open for determination at the hearing.
The judge added that the provisions cited by Ketraco did not make Cabinet approval a precondition to a creditor’s petition. Public interest and the company’s role in providing an essential service, however, could be considered when deciding whether liquidation was appropriate.
‘Those considerations go to the outcome of the Petition, not to the competence of the Court to hear it.’
Inabensa was declared bankrupt and dissolved in Spain, while its insolvency administrator, Ernst and Young Abogados, could assert rights over the award on behalf of creditors.
The Attorney-General has warned of a risk that Kenya could face competing claims to the same debt.
Earlier Inabensa had obtained orders affecting 17 Ketraco accounts, while C.A. Infraestructuras pursued liquidation separately. The competing proceedings raised questions over the legal authority of each claimant and the safeguards needed to prevent duplicate recovery.
In a separate ruling delivered in November 2025, the High Court dismissed Ketraco’s application for Sh185.3 million in security for legal costs, describing the decree as final, binding and enforceable.