Lebanese construction firm Zakhem International Construction Ltd is facing potential liquidation after a Kenyan subcontractor filed insolvency proceedings over an unpaid debt of approximately Sh460 million ($3.56 million).
Azicon Kenya Ltd, which was subcontracted for specialized electrical, instrumentation, and telecommunications installation works, has taken legal action in the High Court of Nairobi, claiming that Zakhem has deliberately avoided paying the outstanding amount since 2020.
Pipeline Project at Center of Dispute
The dispute stems from the Sh48 billion project to replace the 450-kilometer Nairobi-Mombasa pipeline, which was completed in March 2019. Zakhem International had secured the main contract from Kenya Pipeline Company (KPC) and subsequently subcontracted portions of the work to several firms, including Azicon Kenya.
According to court documents, Azicon Kenya’s subcontract was valued at $10.14 million including value-added tax. The company’s Managing Director, David Kibet Tonui, states that while Zakhem International paid $6.51 million, it has refused to settle the remaining balance despite numerous demands.
“The debtor has never disputed the excellent work done by Azicon but failed to meet its contractual obligations by failing to pay the outstanding amount,” Tonui stated in his affidavit.
Legal Battle Intensifies
Azicon Kenya previously obtained a court order on September 23, 2020, compelling Zakhem International to pay the debt. After continued non-payment, the firm served Zakhem with an insolvency statutory demand on January 14, 2025.
“Twenty-one days lapsed since the demand was made, but Zakhem failed, declined, and neglected to pay the debt or any part of it,” said Collins Taliti, representing Azicon Kenya.
Zakhem International has defended itself by claiming that it is still awaiting payment from KPC, but Azicon disputes this assertion, presenting affidavits that they say prove KPC has fully paid Zakhem International for the project.
An affidavit dated November 8, 2024, by Ibrahim Zakhem reportedly states that KPC was not holding any funds on the company’s behalf, contradicting Zakhem’s current position.
Pattern of Payment Disputes
This is not the first payment dispute involving Zakhem International’s work on the pipeline project. Another subcontractor, Multiple ICD (Kenya) Ltd, was reportedly pursuing a debt of Sh670 million last year and had even obtained a court order freezing KPC’s bank accounts. The freeze was eventually lifted after it was determined that KPC was not holding any money on behalf of Zakhem International.
Azicon Kenya has expressed concern that Zakhem International is “busy scheming and deliberately avoiding payment by incorporating new companies to hide assets” in order to evade its financial obligations.
The High Court is expected to hear the insolvency petition in the coming weeks, potentially determining whether the Lebanese construction giant will face liquidation in Kenya.
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