Costly swindle: Why breach of Grand Falls Dam deal could see Kenya pay out billions

Taxpayers could lose up to Sh337 billion (about $2.6 billion) from the cancellation of the High Grand Falls Multipurpose Dam Project by the Kenya Kwanza government.

The National Treasury canceled the project in early July 2025, claiming that the Project Development Report (PDR) failed to meet regulatory and Public Private Partnership (PPP) Act requisites.

But former Attorney General Justin Muturi has made allegations of corruption linked to President William Ruto’s administration in the cancellation.

“Ruto has been pushing for a preferred Chinese company to take over the project. They have registered a company in France and have Chinese faces to come for this project,” Muturi claims.

Former Vice President and Wiper party leader Kalonzo Musyoka has also echoed Muturi’s stand, saying President Ruto promised British Prime Minister Sunak that GBM, a British company which had already won the tender, will be supported to finish the project. Kalonzo claims the President  made the promise when he met Sunak during the 2022 COP27 conference in Egypt.

“He (Ruto) wants to give the contract to his Chinese friends. His company or related interests were not given the tender. That is why he asked the National Treasury to cancel the deal,” Kalonzo said.

The High Grand Falls Multipurpose Dam Project was meant to generate hydroelectric power, bolster irrigation development, manage floods in three counties, and supply drinkable water. The dam reservoir was to cover over 165 square kilometres, storing 5.6 billion cubic meters of water.

The project, located on the Tana River, was initially conceived in the 1950s but has stalled for decades.

GBM Consortium, the firm that won the tender, claims to have spent an amount close to $1 billion (Sh129 billion) in feasibility studies, and preparatory works over several years.

In a petition to the Public Private Partnership Committee, the firm says there will be additional financial compensation claims arising from the termination.

The High Grand Falls project followed the Public Private Partnerships (PPP) framework. The GBM Consortium, a UK-based engineering and construction firm, emerged as the lead private partner and was tasked with financing, designing, constructing, operating, and transferring the project back to the Kenyan government after 30 years.

Timeline of events

Tendering for the project started in 2010. GBM won after competitive bidding against other international firms, including major Chinese construction companies.

According to official documents, the National Irrigation Authority (NIA) was the contracting authority. It was to oversee technical evaluations and project coordination, with oversight from the Public Private Partnership Directorate (PPPD) and support from ministries of water, energy, and national treasury.

GBM was to build the dam, hydropower plants, solar energy infrastructure, irrigation facilities, water treatment, and project management. The engineering firm also brought in five private equity investments to help fund the multi billion mega project.

The contractual model entered between the National Irrigation Authority and GBM followed Design-Fund-Develop-Operate-Transfer (DFDOT) approach.

Under this model, the private consortium designs and finances the project for a 30-year concession period during which they recoup investments through power and water tariffs. After this period, ownership transfers back to the Kenyan government.

The project was privately initiated by GBM Consortium Limited, which submitted its Privately Initiated Proposal (PIP) to NIA on December 28, 2022.

After evaluations, the 39th extraordinary Public Private Partnership (PPP) committee approved the PIP on May 10, 2023, allowing the project to kick off.

By September 20, 2023, due diligence and project approval by NIA/PPPD were complete. Thereafter, the Project Development Agreement (PDA) was signed between NIA and GBM Consortium on September 21, 2023.

Though GBM requested a six-month extension to deliver development reports, only three months were granted to maintain project momentum. The feasibility report, including technical, financial, and environmental data, was submitted by March 8, 2024.

Requests for additional technical and financial clarifications came in April 2024, driven by flooding challenges in the Tana River basin. GBM responded by May 2024, submitting additional consortium members and stronger financial partners.

The first evaluation report by the committee was completed in July 2024 and deliberated in the PPP Committee’s 47th meeting in August 2024, and GBM was given a clean bill of health.

Throughout late 2024 and early 2025, GBM submitted addendums refining the proposal, adding KenGen as a co-contracting authority for energy, and responding to environmental concerns raised by Nature Kenya, a non governmental environment organisation.

Despite positive evaluations and recommendations for negotiation stages, conflicts arose primarily around the involvement of a new company, EDF, whose competing interest complicated approvals.

Boasting of their close connection to President Ruto, EDF wrote a letter of interest to the contract holder, the National Irrigation Authority on May 5 2023, saying they had held a high-level meeting on January 24, 2023, between Ruto and EDF’s Senior Vice President for Africa and the Middle East in Paris, where discussions focused on joint development opportunities.

“EDF expressed its full commitment to achieving successful outcomes in Kenya. Following the meeting between President Ruto and our Senior Vice President, a proposed joint development of electricity and water supply was discussed. EDF has confirmed its interest in pursuing such a development,” the letter reads in part.

Showing impressive coordination and efficiency between government offices, the letter was received and passed through National Irrigation Authority, Department for Water and Sanitation, Principal Secretary at the Ministry of Energy, State Department for Irrigation, and the Cabinet Secretary’s office  in the Ministry of Energy, five different government agencies, in one day.

With EDF firmly in the picture, the PPP Committee, influenced by National Treasury directives, ultimately decided to terminate the contract with GBM in July 2025.

This termination was officially communicated to GBM in September 2025, prompting GBM’s petition to overturn the decision.

“The purpose of this letter, therefore, is to communicate the decision of the PPP Committee and confirm that the Authority, in line with Section 43 (12) of the PPP Act, 2021 intends to restructure the project to meet the evaluation criteria and resubmit the project to the committee for a fresh determination. As the private party, you may consider to resubmit a project proposal meeting the evaluation criteria. The Authority remains available for any further guidance where necessary,” says National Irrigation Authority chief executive Charles Muasya in the communication.

GBM documents to the PPP committee reveal that NIA decided to stop the project without a clear or proper reason. 

“The use of section 43(11)(c) of the PPP Act to terminate the High Grand Falls Dam Multipurpose Project is not tenable as there is no such application or clause to approve a termination of the project.”

This means the project was stopped without following the proper legal steps, which could lead to unnecessary losses of money already spent.

GBM Consortium says it has already spent a huge amount on preparing and developing the project:

“The rejection has caused and continues to cause the Petitioner irreparable harm, including... costs, losses and damages incurred while undertaking project development phase activities amounting to approximately one billion dollars. This investment is at risk of being wasted if the project is stopped or delayed improperly. That is taxpayers’ money or public funds being jeopardized.”

The committee wants the project tender started all over again through an open competition. But another letter from the NIA warn this might cause more problems:

“The PPP Committee directive for open competitive tender is an impropriety, and misadvising the contracting authority on an issue that will bring prolonged conflict with heavy compensation to the petitioner, GBM Consortium Limited.”

Also, from a National Irrigation Authority letter dated August 19, 2025, “... the directive could result in prolonged conflicts and heavy compensation claims...This means redoing the tender process could lead to lengthy legal fights and costly compensation payments — more money lost that taxpayers would have to cover.”

Two official reports from the evaluation committee seen by The Standard say “The decision of the PPP Committee contradicts the evaluation reports... The project met all public interest, feasibility, PPP suitability, and affordability criteria.”

But NIA ignored these reports and stopped the project anyway, raising serious questions about the fairness and transparency of the decision-making.