Mumias sugar takeover takes another twist

By Steve Umidha

A group of well-connected politicians and top management of KCB Group may have conspired to influence the bidding process in awarding the Ugandan miller Sarrai Group a multibillion shilling leasing tender for Mumias Sugar Company, new details now reveal.

Yesterday lawyer Paul Muite, who is representing one of the aggrieved bidders, West Kenya Sugar Company, hinted at a possible foul play in the shambolic bidding exercise whose outcome was annulled last week by the High Court of Kenya terming the lease as ‘irregular.’

“The CEO (KCB Chief executive) and Rao owe the public an explanation as to why they sanctioned the lowest bidder for Mumias.

Political leaders also need to explain why they supported Sarrai,” said Mr. Muite, who said Sarrai Group did not validly win the tender and that the entire process was marred in ambiguity.

The new revelations emerge just days after the High Court cancelled a 20 –year –lease awarded to the Uganda-based miller to manage the troubled Mumias Sugar Company on grounds that it would benefit KCB Group at the expense of the long-suffering Mumias shareholders and other lenders owed by the miller.

Justice Alfred Mabeya on April, 14 froze the Sarrai Group deal – and kicked out Ponangipalli Ramana Rao as the administrator for Mumias Sugar Company.

In his place Judge Mabeya appointed Kereto Marima as the new administrator for the miller, ordering Rao to hand over the company to the latter.

“The manner in which Rao handled the leasing process did not tally with what was expected of him as an administrator,” noted the judge in his ruling, arguing that the lease was not in line with the best interest of the company.

He continued, “The same (lease) was withheld from the court without any explanation. What did it contain that Rao did not want the court to see?”

“This court has considered the allegations made against the leasing process. Rao awarded the lease to the lowest bidder while there were higher bidders, without giving any justifiable explanation,” he queried.

Justice Mabeya’s verdict last week came as a reprieve for some local sugar millers and bidders who had protested at being denied the lease despite placing higher bids than the Ugandan miller. The ruling now offers them a second attempt to take over the firm’s management.

In January this year, the County Government of Kakamega moved to the county’s High Court to stop Tumaz and Tumaz Enterprises, a firm associated with Mwale City investor Julius Mwale from interfering with Sarrai’s Mumias lease. Tumaz had offered Sh 27.6 billion for the leasing of Mumias Sugar Company assets.

Tumaz and Tumaz, and West Kenya were enjoined as plaintiffs in the farmers’ case against the awarding of the lease to Sarrai Group.

Other defendants in the case included PVR Rao who was the Mumias Sugar Company administrator, County Government of Kakamega, Attorney General, and the Competition Authority of Kenya.

Mwale while reacting to the verdict said that his company will bid again in the fresh bidding process.

“The court made a well-argued and reasoned judgment,” said the tycoon, whose firm tapped consultancy firm, J P Mukherji & Associates (JPMA) last November in what insiders believed was likely to favour the bid since JPMA runs Nigeria’s Dangote Sugar refinery Plc.

Raval, through his Devki Group, offered Sh8.4 billion while Rai under his West Kenya Sugar offered Sh3.5 billion.

Other bidders who submitted their bids include Kruman Finances associated with French and Turkish investors, with a Sh19.6 billion bid for a 25-year lease, and Transmara Group (Sarai) with Sh11.5 billion bid for a 20 year lease period.

Pandhal Industries bid in a Sh9.7 billion proposal over a 20 years lease while Kibos Sugar bid came in at Sh8.8 billion.

A Mauritius-based company, Sucrie Des Mascareignes Ltd also participated in the October 2021 public bidding exercise but failed to disclose the value of its bid.

The judge gave the new administrator 60 days to report the list of both secured and unsecured creditors and their amounts to court and start the new leasing process.