Kenyan Gov’t to be paid Ksh.538M after court throws out lawsuit by Canada-based geothermal firm

The Kenya Government is to be paid an estimated Ksh.538million after a lawsuit by a Canada-based geothermal firm was dismissed.

The arbitration at the International Centre for Settlement of Investment Disputes had been filed by WalAm Energy Inc, a United States/ Canadian geothermal company headquartered in Canada.

“The dispute relates to Suswa geothermal fields and was filed in ICSID in February 2015. The hearing took place in London in May 2018,” a statement from Attorney General Paul Kihara Kariuki reads.

According to the AG, WalAm Energy Inc. sued the Kenyan Government following the cancellation of its Geothermal Resources License.

He stated that WalAM Inc. contended that the Government of Kenya unlawfully revoked the Geothermal Resources License thereby breaching its obligations under the Geothermal Resources License and the Geothermal Resources Act, including, the unlawful expropriation and the violation of the minimum standard of treatment of foreign investors.

Further, WalAM Energy Inc. sought to have the Geothermal Resources Licence reinstated and also sought compensation amounting to US$ 339.6 million ( Kshs 37 Billion) and interest for expropriation.

The Geothermal Resources License had been issued by the former Minister for Energy, Hon. Kiraitu Murungi on 5th September 2007 under the Geothermal Resources Act of 1982.

It granted WalAm Energy Inc. exclusive rights to explore, drill for, extract, produce and dispose geothermal steam and other geothermal resources in the Suswa area for a period of thirty years.

However, in October 2012, the Government revoked the license after establishing that WalAm Energy Inc. had not performed its duties under the license and did not have capacity to undertake the required exploration and exploitation work.

The Tribunal in an award dated July 10, 2020 thus decided as follows:

(1) All of WalAm’s Energy Inc. claims are dismissed; and

(2) That WalAm Energy Inc. shall bear its own legal fees and expenses and the entirety of the costs of the arbitration.

WalAm shall therefore pay the Government of Kenya US$648,857.75 ( Ksh. 70,067,637) corresponding to its share of the costs of the arbitration.

WalAm shall also reimburse 75% of the Government of Kenya’s legal fees and expenses in the amount of € 3,586,039.28 (Ksh. 441,082,797 ) and US$252,262.82 (Ksh. 27,244,384.60)

The implication of this ruling is that the Ministry of Energy and the Geothermal Development Company (GDC) are now at liberty to exploit the geothermal resources in the Suswa Geothermal fields and grow the energy capacity of Kenya.