Kwale sugar miller seeks court protection in row with developer

A contractual dispute over the construction of the Sh16 billion Kwale Sugar Company has landed in court after civil works company Epco Builders sought to fix the miller in a winding-up case.

Court papers show that the parties disagreed over timelines and execution of the development as per the contract.

Issues raised with the project engineer were not tackled in time by Epco Builders, causing delays after which the construction company demanded penalties for the delays.

The company raised a bill of Sh652 million in January after talks failed and has rushed to court to wind up the sugar firm even before an arbitrator could sort out the matter.

“Kwale Sugar have a legitimate under the terms of the contract to a counterclaim, set-off or cross-demand which possibly equals or exceeds the amount of the alleged debt or debts claimed by Epco Builders,” the miller’s advocate, Prof Tom Ojienda, said in his application for the firm.

Construction of Kwale integrated sugar project has had several delays, including when Epco Builders was mobilising resources to begin construction after winning the contract.

The construction of the facility, set to be run as a joint venture between Kiscol and leading Mauritian sugar producer Omicane, was scheduled to kick-off in October 2011 and the initial batch of products rolled out by October 2012.

The planned factory, with a capacity of 3,000 tonnes of cane per day will include a 30,000-ethanol production plant.

The facility will also host an 18-megawatt power plant run on bagasse, a by-product of cane.

The contract required extensive due diligence specific construction features to be vetted by the financiers, engineers and contractors with protections against breaches.