Court Backs Kenya Power Termination of Sh410 Million Contract

The High Court has upheld a decision by the Kenya Power and Lighting Company (KPLC) to terminate a Sh410.6 million contract for the supply of electricity poles.

The ruling dismissed a lawsuit filed by Inter Tropical Timber Trading Ltd, which had sought Sh284.9 million in damages for breach of contract, but the court found that the firm failed to meet delivery deadlines.

The dispute originated from a 2012 commercial agreement. Under that arrangement, the supplier committed to delivering 29,500 treated wooden poles to help the power utility expand its distribution network.

KPLC had issued several extensions over the years to help the supplier complete the order. Despite these multiple extensions, the contracting firm was unable to deliver the full quantity of poles.

The utility eventually chose to terminate the relationship after the contract period lapsed. This prompted the supplier to sue for damages, alleging that the utility breached the agreement, but the court rejected this argument.

The supplier claimed that subsequent emails and ongoing discussions between the two entities effectively renewed the expired contract, but the court ruled that an expired agreement cannot be revived.

According to the judge, negotiations or electronic communications that happen after a contract expires do not automatically reinstate the old terms. This ruling protects procurement entities from forced renewals.

The court further noted that the supplier remained in material breach of the initial agreement, which justified the ultimate decision by KPLC to stop working with the wooden poles merchant.

Additionally, the judge rejected the contractor's claims for compensation over undelivered stock and other related financial losses. The court ruled that the contractor failed to present sufficient evidence of actual losses.

This ruling underscores the legal weight of strict timelines in public procurement contracts. State agencies often struggle with delayed materials, which directly impacts the progress of critical infrastructure projects.

For KPLC, securing a reliable supply of transmission poles remains essential. The utility has recently shifted focus towards using durable concrete poles for its network upgrades.

This shift aims to reduce long-term maintenance costs and improve grid reliability across the country, especially during severe weather. Wooden poles, although cheaper initially, often present higher decay risks over their lifespan.

The supplier, Inter Tropical Timber Trading Ltd, is not new to supply-chain disputes with Kenyan energy sector agencies. In 2019, the firm was involved in a legal battle with the Rural Electrification and Renewable Energy Corporation (REREC).

That earlier dispute involved allegations concerning the quality of wooden poles supplied for rural electrification projects, highlighting ongoing friction between the contractor and state energy bodies over standard compliance.

Legal experts note that this establishes a clear precedent for other state-owned enterprises dealing with non-performing contractors under Kenyan procurement law.

The ruling is seen as a key legal shield for state corporations, as it clarifies that ongoing correspondence cannot bind a public entity once a contract has officially expired.

The judgment serves as a warning to suppliers who consistently fail to honor delivery timelines stipulated in public tenders.

With this dispute finally resolved, the state utility can now direct its procurement focus toward more reliable contractors to support ongoing network maintenance and connection projects across Kenya.

Lawyers representing both parties were unavailable for immediate comment following the delivery of the judgment.