Mbadi Sets Record Straight on Kenya Losing Ksh315 Billion Over Flopped Project

The National Treasury has dismissed reports that Kenya could lose up to Ksh317 billion following the termination of the High Grand Falls Dam Project, stating that no binding financial obligation exists between the government and the project’s private proponents.

In a detailed statement issued on Wednesday, 24 September 2025, Treasury Cabinet Secretary John Mbadi clarified that the cancellation of the project under the Public-Private Partnership (PPP) framework was lawful, transparent, and fully consistent with the provisions of the PPP Act.

The statement followed media reports alleging that the government faced massive financial losses due to the project’s termination.

Treasury Denies Liability Claims

The Treasury trashed reports suggesting that taxpayers would bear losses amounting to Ksh317 billion, stressing that no binding financial agreements had been signed.

“Under the Public Private Partnerships framework, no obligation arises until a binding PPP Project Agreement approved by the PPP Committee is signed by project parties,” the statement read.

The Treasury emphasized that, since no Project Agreement had been signed, there was no legal or financial liability on the part of the government, dismissing the reported figure as inaccurate and misleading.

High Grand Falls Dam Project Termination

According to the Treasury, the High Grand Falls Dam Project was first submitted by the National Irrigation Authority (NIA), acting as the contracting authority, on January 30, 2023.

The proposal was lodged under the PPP framework by the GBM consortium, which at the time included ERG International.

On 8 May 2023, the project received preliminary approval to proceed to the development phase, a stage that allowed GBM to conduct extensive technical and feasibility studies to determine whether the project was sustainable, practical, and beneficial before any construction commenced.

According to Mbadi, to formalize the process, NIA and the GBM consortium signed a Project Development Agreement (PDA), which outlined how studies would be conducted, the rules to be followed, and the legal obligations under the PPP Act.

The NIA later submitted the Project Development Report (PDR) on March 14, 2024, for joint evaluation. After reviewing the report, the PPP Directorate tabled it before the PPP Committee on July 31, 2024.

During a meeting held on July 2, 2025, the Committee determined that the PDR did not meet several statutory requirements.

Consequently, the committee approved the project’s termination under Section 43(11)(c) of the PPP Act and recommended that NIA resubmit the project through a competitive procurement process.

Foreign Influence Allegations

CS Mbadi also addressed claims that the PPP Committee was influenced by foreign interests or made decisions under external pressure.

The Treasury confirmed that a separate proposal was received from Electricité de France (EDF), demonstrating broad market interest in the project.

Under the PPP Act, the receipt of a second proposal requires open and competitive procurement to ensure fairness and transparency.

It further clarified that the EDF proposal is still pending consideration and has not been approved for implementation.

The claims that the proposal was reviewed by five different government agencies in a single day were described as “completely false and meant to mislead.”

The Treasury reaffirmed that the PPP Committee operates independently and makes decisions based on affordability, risk allocation, and value for money.

Company Changes

The Treasury noted that the exit of ERG International from the GBM consortium altered the project’s structure from what was originally approved, necessitating a re-evaluation of the proposal to ensure compliance with PPP regulations.

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Additionally, the ministry explained that the initial tendering process for the High Grand Falls Dam, which began in 2017, was conducted under the Public Procurement and Asset Disposal (PPAD) Act.

The process was later terminated by the courts, and GBM submitted a new proposal under the PPP framework in January 2023.

Path Forward for the Project

With the current proposal now terminated, the Treasury has recommended that the contracting authority reintroduce the project for competitive bidding.

This move would enable multiple qualified bidders to participate, thereby enhancing transparency and ensuring the selection of a proponent offering the best combination of technical expertise and cost efficiency.

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CS Mbadi reaffirmed the government’s commitment to delivering large-scale infrastructure projects that are sustainable and beneficial to the public while maintaining the highest standards of transparency and accountability.

“The National Treasury remains committed to delivering infrastructure projects that are viable, sustainable, and beneficial to Kenyans.”

The High Grand Falls Dam project, once completed, is expected to be one of the largest infrastructure investments in the country, aimed at boosting water storage, irrigation, and electricity generation in line with Kenya’s long-term development goals.

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