Zakhem Sues Kenya Pipeline Company for KSh10.89 Billion Over Line 1 Contract Claims

A Lebanese contractor has sued Kenya Pipeline Company PLC for US$84.12 million, equivalent to KSh10.89 billion, over the Line 1 Replacement Project. Zakhem International Construction Ltd filed the claim at the Milimani High Court under case number HCCOMM E346 of 2026.

The suit arises from the contract for procurement, construction, testing and commissioning of the pipeline. Zakhem is seeking US$19.04 million in extension of time claims and US$65.08 million in interest on delayed payments.

KPC’s Board of Directors stated it has credible legal and factual grounds to contest the suit. The company has instructed its legal team to defend the proceedings vigorously and protect shareholder interests.

The board maintained that the development does not affect KPC’s strategic focus, operational stability or financial position. KPC said it will continue normal operations while the matter proceeds through the courts.

The announcement was issued with the approval of the Capital Markets Authority in line with public offers, listings and disclosures regulations. KPC has committed to making further disclosures as material developments arise.

The Line 1 Replacement Project forms a critical part of Kenya’s petroleum transport infrastructure. It is designed to modernise and secure the supply of refined petroleum products across key regions.

The dispute highlights recurring challenges in Kenya’s infrastructure contracting environment. Delayed payments to contractors have increasingly led to legal claims and cost escalations on major state-linked projects.

Construction sector observers note that such cases can slow project delivery and raise financing costs for future works. The Line 1 matter is now among the more significant construction contract disputes of 2026.

KPC emphasised that it remains focused on its core mandate of petroleum transportation and infrastructure maintenance. Shareholders have been advised to exercise caution when dealing in KPC securities pending resolution of the case.

The company said preliminary legal advice supports its position. It expects the matter to be resolved through the judicial process without disrupting ongoing operations or strategic plans.