Receiver accuses West Kenya of seeking to stall Mumias operations


Mumias Sugar receiver manager Ponangipalli Venkata Ramana Rao. PHOTO | DIANA NGILA | NMG

The High Court on Thursday heard that the KCB #ticker:KCB receiver-manager settled on Sarrai Group for the lease of Mumias Sugar Company because the Uganda-based company proved that it had the technical capability to revive the ailing miller.

Mr PVR Rao, the administrator of Mumias Sugar, told the High Court that it is not correct to assume that the highest financial bid should have won the 20-year lease, but he had to consider the technical aspects, besides the financial proposal.

His lawyer, Senior Counsel Kimani Kiragu, said it was his considered opinion that West Kenya, which bid Sh36 billion for Mumias, was not interested in the revival of the miller but intended to stall the operations to ensure it continues to enjoy the monopoly in the sugar industry.

“I clearly indicated that the bids I received would go through both technical evaluation and financial evaluation. It is not correct to proceed, as West Kenya and Tumaz & Tumaz have done, on the basis that the highest financial bid alone would be the winner,” Mr Rao said in an affidavit.

Mr Kiragu further said West Kenya failed to demonstrate how it would pay Sh150 million per month, and Sh1.8 billion per annum, for the lease as captured in its financial bid.

In the affidavit, Mr Rao said he was aware that the Rai Group, which is linked to West Kenya, took over Pan Paper Mills Limited in Webuye in 2016, but the paper-making company has not been in operation for more than 11 years.

The court heard that the bid was for the leasing of assets for 20 years, and not for a sale, as mistaken by farmers and suppliers who filed the case challenging the lease to Sarrai Group.

Mr Kiragu said the Mumias Sugar assets are mainly industrial and are prone to degradation due to corrosion if they are left non-operational for a long time.

He disputed claims that he rushed the process but took about a month to finalise the evaluation and award the lease to the Sarrai Group.

He said Tumaz & Tumaz was trying to fill the gaps in its bid by submitting a fresh one through the court case, and that the company was trying all means to scuttle the process by filing the court cases.

Jaswant Rai of West Kenya has faulted the lease saying the bidding process was shrouded in secrecy and lacked accountability and transparency.

The case was pushed to February 22.

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