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Corrupt Ketraco loses a Sh5 billion case to a bankrupt foreign firm

CPA Fernandes Barasa, Ketraco MD and CEO

There’s a clear indication that Fernandes Barasa, the corrupt Ketraco CEO has used his position to amass wealth through extra-legal means and he is laundering those proceeds of crime in his Foundation.

The Kenya Electricity Transmission Company (Ketraco) is once again in the news for losing taxpayers money.

In the corrupt Kenyan civil scene, Ketraco under Mr Barasa found a niche market to scam Kenyans, knowingly award contracts to foreign firms that are near bankrupt.

READ MORE: Did Ketraco boss Fernandes Barasa give contracts to broke firms for free?

As a highly trained accountant who once headed the Institute of Certified Public Accountants of Kenya (ICPAK), Mr Barasa has used his position to loot Ketraco and build a foundation.

The firms that have been awarded contracts by Ketraco, despite bad financial health, paid to get those contracts, learnt.

The Business Daily reports that the state-owned firm has once again lost a  second attempt in court to stop paying the foreign contractor, Instalaciones Inabensa S.A, Sh5 billion for breach of the contract financed by an African Development Bank (AfDB) loan.

Ketraco was faulted for terminating the contract, Instalaciones Inabensa S.A took Ketraco to court and was awarded the amount by an arbitration tribunal on July 30, 2019.

After losing the first attempt at the High Court in February this year, Ketraco asked the appeal court to suspend the execution of the orders of Justice Maureen Odero.

“The contractor is a foreign company, has no known assets or physical place of business within Kenya and it is of questionable liquidity as its parent company, Abengoa SA, has filed for a Voluntary Declaration of Bankruptcy in Seville Spain,” Ketraco informed the appellate court.

But Justices Asike Makhandia, Mbogholi Msagha and Mumbi Ngugi ruled that there was no evidence to show that the contractor would not be in a position to repay the amount should Ketraco’s appeal succeed.

Ketraco had entered into two contracts with the Spanish firm for construction of an electricity transmission line and extension of an existing sub-station at Lessos in Rift Valley in April 2013.

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The firm was awarded the tender to construct a 127 kilometre 420-kilovolt double circuit line from Lessos substation to Tororo in Uganda with a capacity of 1200 megawatts.

The power interconnection project was part of the electricity network aimed to link Kenya to Uganda, Rwanda, Burundi, and the Eastern part of the Democratic Republic of Congo under the Nile Equatorial Lakes Subsidiary Action Program (NELSAP).

In April 2016, Ketraco terminated the contracts over what it termed “non-performance’’, leading to a dispute that was referred to arbitration.

After the termination of the contract the firm went to court and obtained an order that has caused a delay in hiring a new contractor.

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The arbitrators unanimously ruled in favour of the Spanish firm and ordered Ketraco to pay Euro 30,887,820.39 (Sh3,933,563,926.67) and interest of Euro 6,477,870.77 (Sh824,956,842.56). It continues to attract further interest of 12 percent per annum from the date of the award until payment in full.

In addition, the tribunal condemned Ketraco to shoulder the legal costs, arbitrators’ costs and administrative costs of Sh102.1 million, Sh83.5 million and Sh2 million respectively.

The total bill slapped on Ketraco was in excess of Sh4.8 billion.

The arbitration tribunal comprised Stanley Kebathi, Justice Joseph Nyamu and Kariuki Muigua.


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