Kenyan Firms Protest Leasing Of Mumias Sugar Factory To Ugandan Company

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Two firms that placed the highest financial bids for leasing troubled Mumias Sugar have protested the move by KCB receiver manager to award the tender to a Ugandan company, arguing evaluations on technical capacity should have been done by a third party.

Kruman-Finances and Tumaz & Tumaz now argue that Sarrai Group –which runs three sugar factories in Uganda– was least qualified to be awarded the deal on grounds that it was not the highest bidder in the process.

Kruman-Finances which was second highest wanted a 25 year-lease with Sh19.7 billion offer.

The firm, which is associated with French and Turkish investors, had proposed a 15 percent free shareholding to Central and County Government during the restructuring of the company and post-restructuring after 20 years before an Initial Public Offering (IPO).

“The bid evaluation report on technical capacity should be evaluated by a third party other than the Receiver Manager and clear ranking provided, based on actual evaluation facts as per the technical proposal,” said the firm.

On his part, businessman Julius Mwale, who had placed the highest bid of Sh27.6 billion but missed out on the offer, has said that he will be moving to court to challenge the process saying that it was not transparent.

The businessman says his company Tumaz and Tumaz was best suited in winning the bid based on the amount that they had placed and the technical expertise that they had tapped from leading consultants in sugar sector.

“We are moving to court immediately to challenge this process because the receiver manager was not transparent in his evaluation of the bids. I am confident that the court will stop this process given that there is enough evidence to show that the process was flawed,” said Mr Mwale in an interview.

Mr Mwale had unveiled a multi-billion-shilling package that would lead to the upgrade of the rundown production plant and attract farmers back to cane production.

Sarrai Group secured the lease for assets of Mumias Sugar Company and was given the mandate to revive the collapsed sugar milling company, having emerged winners of the bidding process that lasted over four months, according to the receiver manager P V R Rao.

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The miller was in September 2019 placed under receivership by KCB Group to protect its assets and maintain its operations.

Its shares were then suspended from the Nairobi bourse, and the leasing deal will be keenly watched by shareholders, including the State with a 20 percent stake, and creditors who are owed over Sh11 billion.

Mumias owes Proparco Sh1.84 billion secured using the electricity generation plant, Ecobank Sh1.77 billion on the ethanol plant, and the Treasury Sh2.83 billion.


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