Dubai distillery builder sues Mumias Sugar for Sh415m

A Dubai-based firm has sued Mumias Sugar Company over an outstanding debt of $4.4 million (Sh415 million) due to it for constructing the miller’s ethanol distillery.

Peeraj General Trading and Construction Company says Mumias had undertaken to settle the debt in two equal instalments between November and December last year.

The multinational says Mumias has ignored several demands for the outstanding debt.

The Dubai firm joins a long list of creditors that have come calling on the struggling miller since President Uhuru Kenyatta negotiated a bailout plan for the Nairobi Securities Exchange-listed firm.

Mumias owes Kenya Power Sh1.1 billion and G4S Sh45 million, among other suppliers and service providers.

“Mumias’ inordinate delay in effecting the final payment to the amount claimed has occasioned Peeraj enormous strain from its bankers and creditors thus hampering its operations,” Peeraj says in court papers.

“Despite demand and notice of intention to sue, Mumias has neglected to pay the sums.”

Peeraj was awarded the tender for construction of the distillery in 2010, and was to complete the project in 10 months.

Weather conditions and other delays saw the construction firm finish the project in 22 months. The distillery’s construction was completed on April 11, 2011. The delays also saw the project cost an additional $1.8 million (Sh169 million) which the miller agreed to pay through a letter sent to Peeraj in March last year.