The construction of the Sh63 billion Arror and Kimwarer dams is set to resume four years after they were halted.
This is after President William Ruto held talks with his Italian counterpart Sergio Mattarella in Nairobi.
In 2019, former President Uhuru Kenyatta's administration stopped the construction of the twin dams in Elgeyo Marakwet on claims of graft.
"We have agreed on a framework to settle all court cases," said President Ruto on Tuesday.
In the dam fraud case, former National Treasury CS Henry Rotich, his Principal Secretary (PS) Kamau Thugge alongside four others were charged with conspiracy to defraud and abuse office in 2019.
However, the office of the Director of Public Prosecutions (DPP) dropped charges of 15 out of the 24 people they had taken to court, including Thugge.
Ruto said: "We have further committed, in good faith, to re-establish cooperation on the construction of Arror, Kimwarer, and Itare dams and other water and sanitation projects which are critical to our agenda on food security and climate action."
Ruto announced that Italy had committed to advance Sh14 billion (100 million euros) in grants and soft loans covering projects in agriculture, development of MSMEs, housing and urban settlement, health, the digital superhighway, and creative economy.
"This will be done through the Kenya-Italy Multi-Annual Five-Year Cooperation Strategy on sustainable development," he said.
When the project was halted and the contractors chased out of the sites, the matter was taken for arbitration in London where the government agreed to settle it and even paid Sh10 billion for fear of being fined Sh80 billion, which it stood to pay for prematurely terminating the contract.
Among other agreements between the President and his Italian counterpart was cooperation in enhancing the informal settlement redevelopment programme, which the two countries recently launched to facilitate the security of land tenure in informal settlements in Kilifi, Siaya, and Ngong municipalities.
Ruto said the two countries established diplomatic relations in 1964 and Italy had since been a valued partner to Kenya in political, economic, social, defence, and security cooperation. The President said the meeting provided them with the opportunity to discuss, modalities of enhancing trade and investments.
"I am delighted to announce that President Mattarella and I witnessed the signing of two agreements, two MOUs, and a joint declaration to provide a framework for the advancement of bilateral cooperation in different fields," said President Ruto.
They signed an MOU on Health towards the realisation of Universal Health Coverage and improved pharmaceutical production.
Ruto said they agreed to remove non-tariff barriers and promote trade and investment, including negotiating avoidance of a double-taxation deal to promote foreign direct investments by Italian companies.