Kenya Pipeline Company (KPC) has been joined in a case in which a Kenyan firm is seeking more than half a billion shillings from Zakhem International Construction Company Limited over unpaid dues arising from the replacement of the Mombasa-Nairobi pipeline.
In a ruling on October 7, the High Court joined KPC as an interested party in the dispute between Azicon Kenya Limited and Zakhem, a Cyprus-registered firm. KPC is expected to provide information on payments it made to Zakhem for the project.
‘Kenya Pipeline Company Limited is joined as an interested party to state the current status of its payments made to Zakhem International Construction Limited, the Defendant/Judgment Debtor/Respondent herein,’ the court said.
Now, KPC has 21 days to file its response, with the matter scheduled for mention on December 3.
Azicon was among firms subcontracted by Zakhem to undertake works during the replacement of the 450-kilometre Mombasa-Nairobi pipeline. The Kenyan firm said it was contracted to carry out electrical, instrumentation and telecommunication installation works for the project that Zakhem was undertaking for KPC.
Azicon is now seeking to establish whether KPC paid Zakhem all the amounts due under the main contract, arguing that the information is critical to the enforcement of its judgment against the contractor.
The firm told the court that it was in the interest of ‘justice, equity and conscience’ for KPC to participate in the proceedings and confirm the payments made to Zakhem.
Azicon claims that despite KPC making payments to Zakhem, the construction company has failed to settle its outstanding debt, leaving the Kenyan firm in financial hardship even though the works were completed, commissioned and are operational.
‘The Plaintiff/Decree Holder/Applicant (Azicon) has proved that Kenya Pipeline Company Limited has paid the Defendant/Judgment Debtor/Respondent in full,’ the firm said in its application.
Azicon further accused Zakhem of frustrating efforts to realise the fruits of its judgment by disposing of or interfering with property that had already been lawfully attached.
‘That the Defendant/Judgment Debtor/Respondent (Zakhem), acting in bad faith, concealed the fact that it received all the funds from Kenya Pipeline Company Limited in the partial decree,’ Azicon managing director David Kibet Tonui said.
Azicon said it was paid $6,509,502.66 after completion of the works but that Zakhem still owes it $4,160,857 (Sh540.4 million at current exchange rates).
The firm said there was evidence that Zakhem had received the payments from KPC but had declined to settle the outstanding amount despite being served with a court order.
KPC’s participation in the proceedings is expected to establish the payments made to Zakhem and whether the amounts linked to Azicon’s outstanding claim had been received by the contractor. Azicon moved to court and obtained an order on September 23, 2020, compelling Zakhem to pay the money. The firm then said it had evidence that Zakhem had received the full payment from KPC.
The latter filed a separate case seeking to liquidate Zakhem after sending a statutory demand on January 14, 2025.
In reply, Zakhem claimed that it was still waiting to be paid by KPC.
‘The debtor is deliberately and blatantly telling lies as there are two affidavits proving Kenya Pipeline Company Limited has paid the Debtor/ Applicant herein all amounts in HCCCE322 of 2019,’ Azicon said.
The Kenyan firm pointed out that there is an affidavit dated November 8, 2024, by Ibrahim Zak-hem stating that KPC was not holding any funds on its behalf. Another firm subcontracted by Zakhem International to execute the contract was also pursuing a debt of Sh670 million last year.
Multiple ICD (Kenya) Ltd had even obtained a court order freezing KPC’s bank accounts last year, but the freeze was lifted after it emerged that the oil company was not holding any money on behalf of Zakhem International.