West Kenya Sugar moves to block Butali operations

Agriculture, Fisheries and Food Authority
Agriculture, Fisheries and Food Authority interim director general Alfred Busolo. The authority is set to meet with stakeholders today to discuss Butali licensing. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

West Kenya Sugar Company has said it will move to court today to block operations of rival miller Butali Sugar if the industry regulator fails to do so by 8am this morning. In a buildup to a legal duel that promises to open the lid on vicious underhand market wars in the sugar industry, West Kenya wants its rival, which it says has invaded its turf illegally, to cease operations.

Last week, the miller said it would not attend a meeting that the regulator has organised today to collect stakeholder views on Butali Sugar’s application for a miller’s licence.

In a letter dated October 2 addressed to Agriculture Fisheries and Food Authority (AFFA) boss Alfred Busolo, West Kenya lawyer Kibe Mungai said the immediate effect of a Court of Appeal ruling on September 19 was that Butali has no licence to operate as a sugar miller.

“As the CEO of AFFA, it is your responsibility to ensure that BSML (Butali Sugar Mills Ltd) ceases operations immediately unless and until it is issued with a licence,” Mr Kibe said in the letter. “If on Monday, October 6, BSML continues to conduct the business of a sugar miller, then we shall commence legal proceedings to compel your esteemed authority to enforce the law.”

Last week, Mr Busolo told the Business Daily that the regulator has formed a technical committee that will decide whether or not to withdraw Butali’s licence following last month’s Court of Appeal directive that AFFA considers the sugar miller’s application for a licence.

West Kenya, however, wants Butali’s operations halted immediately until such a time when that decision will be made. According to Mr Busolo, the decision to withdraw or award a licence to Butali will among others be informed by stakeholder views, hence the meeting today.

But Mr Kibe said West Sugar will sue AFFA, Mr Busolo and head of sugar directorate Rosemary Mkok if the meeting goes on. He added that the process to consider an application for a miller’s licence must be sanctioned by AFFA’s board through a Kenya Gazette notice, which had not happened.

“It, therefore, follows that the purported stakeholders meeting that the authority has convened on October 6 at Malava Friends Church is illegal and without any legal basis whatsoever,” he said.

Closure of Butali will see 2,500 employees go home. The battle between the two companies has over the last decade sucked in politicians.

West Kenya believes Monday’s meeting is political, intended to intimidate its managing director Tejveer Rai to withdraw the firm’s objections.

“Our client has credible evidence and information that directors, employees and agents of BSML on one hand and politicians in Kakamega and adjoining counties on the other hand are mobilising people and political activists to come and present petitions to the authority demanding the registration of BSML,” Mr Kibe said.

The current battle is between two investors, Jagwant Singh Rai of West Kenya Sugar Company and Sanjay Patel of Butali Sugar Mills.
The bone of contention is a rule under the Crop Production and Livestock Act that requires that a factory be set up at least 25 kilometres from the location of an existing one.