Telkom Kenya faces Sh3.6bn law suit for breaching contract

Troubled mobile phone company Telkom Kenya is facing Sh3.6 billion claim in a law suit filed by a Uganda firm for breach of contract.

Kilembe Copper Smelters has sued Telkom Kenya for defaulting on a Sh3.6 billion ($40 million) agreement to smelt copper and cables that the latter held in its stores.

According to documents filed in court, the Uganda smelter says it entered into a contract with Telkom Kenya in 2010 where it was to smelt over 6,000 tonnes of decommissioned cables, other metals and alloys.

However, the volume was later renegotiated to 2,000 tonnes with an agreement to share the proceeds of the deal on a 50:50 basis.

Kilembe now notes that it has only smelt a meagre 150 tonnes, even after relocating its factory from Jinja, in Uganda, to Industrial Area, in Nairobi, on assurance by Telkom Kenya of good business.

“We are now being frustrated by Telkom’s refusal to fulfil its contractual agreement,” Kilembe Managing Director Thomas Eggenburg said in documents filed in court.

HUGE LOSSES

As a result of the breaches, Kilembe says that it has suffered huge losses which can only be remedied by the court.

According to an affidavit sworn by Mr Eggenburg, his first contact was through a Mr Daud Opiyo from Telkom Kenya who invited his company to open talks on the possibilities of processing copper.

Mr Eggenburg would later meet a Mr Martin Ngugi, the head of logistics and Ms Jane Karuku, the deputy CEO Telkom who negotiated the deal on behalf of the telcom firm.

It is at this meeting that Telkom Kenya told Kilembe that it would experience problems exporting the cables due to the law restricting export of scrap metal.

Mr Eggenburg then proposed to relocate the firm’s plant to Kenya where it would smelt the cables.