Companies

Procurement board rejects petition on Mumias Sugar lease

mumias

Entrance gate at Mumias sugar company. PHOTO | ISAAC WALE | NMG

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Summary

  • The Public Procurement Administrative Review Board (ARB) has dismissed a petition challenging a 20-year leasing contract awarded to a Uganda-based company to revive the ailing Mumias Sugar Company.
  • The application was filed by Tumaz & Tumaz Enterprises which lost out in the bid to lease the miller, a move that saw it launch legal fights at the courts and ARB.

The Public Procurement Administrative Review Board (ARB) has dismissed a petition challenging a 20-year leasing contract awarded to a Uganda-based company to revive the ailing Mumias Sugar Company.

The application was filed by Tumaz & Tumaz Enterprises which lost out in the bid to lease the miller, a move that saw it launch legal fights at the courts and ARB.

A five-member board dismissed the request for the review of the tender saying the ailing miller was not subject to the Public Procurement and Disposal Act because it is not a fully public owned entity nor does the government hold a controlling stake in the company.

The lease was awarded to Sarrai Group, which was the third lowest bidder with Sh11.5 billion but Tumaz, which was the highest bidder with Sh27.6 billion challenged the process saying it lacked transparency.

The board led by Faith Waigwa noted that the Treasury only holds 20.04 per cent shareholding in Mumias, meaning that it cannot be subject the ABR.

“Having found that Mumias Sugar is not a public entity, it is no brainer that it is then not a procuring entity for which the Act will apply and consequently any procurement and asset disposal proceedings,” the board said.

Tumaz faulted KCB-appointed receiver manager, Ponangipalli Venkata Ramana Rao, saying there was lack of transparency in the opening of the tenders.

The company alleged that Mr Rao conducted the process in secrecy and he failed to disclose the contents of the tenders other than financial aspects and there was therefore no way of knowing whether tenderers submitted met all the requirements.

Tumaz has also filed a case before the High Court and already obtained orders stopping the operations at the site after Sarrai Group started the revival of the miller on December 22.

The miller was placed under receivership in September 2019 and Mr Rao later invited bids to lease the plant, excluding ethanol and cogen (power generation) plants.

Tumaz said the receiver manager opened the tenders on September 10 at 4pm but did not share any contents of the tenders and instead requested all tenderers to sign on the financial pages of the eight tenders. The company further said Mr Rao later rescheduled the meeting to announce the particulars of the tenders on two occasions.

Mr Rao disputed the claims saying he opened the tenders in the presence of all tenderers who were present in a transparent manner, in broad daylight and the presence of all tenderers, who were in attendance.