Cabinet Okays Negotiations To Resolve Arror And Kimwarer Dams Project Standoff

News Desk March 22, 2023 in NEWS - 2 Minutes

As proposed by President Ruto, when he hosted his Italian counterpart at State House Nairobi, the cabinet on Tuesday resolved that an alternative dispute resolution mechanism be pursued to resolve the impasse in the implementation of the Arror, Kimwarer and Itare Dam projects.

The Cabinet has okayed the ongoing out-of-court negotiation between Kenya and Italy to settle the stand-off over the unprocedural termination of the Arror and Kimwarer dams contracts.

The move by the Cabinet which comes a week after a meeting between President William Ruto and Italian President Sergio Mararella, during his visit to the country last week, seeks to save the country from likely huge penalties arising from breach of contract.

As proposed by President Ruto, when he hosted his Italian counterpart at State House Nairobi, the cabinet on Tuesday resolved that an alternative dispute resolution mechanism be pursued to resolve the impasse in the implementation of the Arror, Kimwarer and Itare Dam projects.

The cabinet gave National Treasury the nod to enter into a negotiated commercial settlement for the Commercial Contracts and Financing Agreements for the projects.

The Italian firms whose contracts were cancelled during the last regime in 2019 had moved to the International Court of Arbitration, demanding more than Ksh.11 billion in compensation for the cancellation.

The two dams were to be financed through complex loans from privately-owned lenders, but whose involvement was facilitated by the Italian government.

Last week’s agreement between Kenya and Italy averts what would be potential sanctions for Kenya for reneging on international commercial contracts.

“The re-start of these projects is not only urgent but a priority. It is necessary because it is going to supply water to many towns in Nakuru County, and many other areas in Kericho and Elgeyo Marakwet Counties.

“We are going to resolve the issues surrounding Itare, Arror and Kimwarer dams an issue that has stalled the construction of those dams for three years. Kenya and Italy have agreed and the process of sorting out the matters has started in earnest,” said Ruto.

The negotiations with the Italian firms will also cover the construction of Itare Dam.