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Friday, January 21, 2022

Sarrai Group Begins Mumias Revival

Despite a court injunction postponing the takeover, Sarrai Group has begun to restore Mumias Sugar company.

The Sarrai Group has been on the ground since December 24, conducting various activities at the company, including a series of talks with management.

Last Monday, the court ordered the receiver-manager to suspend leasing until the outcome of the action filed by Tumaz and Tumaz, a corporation owned by Butere-based billionaire Julius Mwale.

Tumaz’s lawyers, Javier Georgiadis and Sylvester Law LPP, had asked the court to overturn the receiver manager’s decision to award the contract to Sarrai on December 22.

Kruman-Finances and Tumaz & Tumaz, the two firms that submitted the highest financial bids for the lease contract last month, have contested the KCB receiver manager’s decision to award the contract, claiming that technical capability evaluations should have been done by a third party.

Sarrai Group, which operates three sugar plants in Uganda, was claimed to be the least qualified for the grant because it was not the highest bidder.

The Sarrai Group filed a motion in court on Monday to have the order overturned, but the court denied their request, stating that the judgement from December 29, 2021, remains in effect until the case is resolved later this month.

The two argued that Sarrai Group –which runs three sugar factories in Uganda– was least qualified to be awarded on grounds that it was not the highest bidder.

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The Sarrai Group moved to court on Monday to have the order quashed but the court did not grant them their wish, arguing that the ruling made on December 29, 2021, still stands until the matter is ruled later this month.

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Justice Antony Ndung’u asked the conglomerate to file its submissions for the hearing of the main case. The court battle has emerged as the latest threat to revival of the miller should the matter drag on for months.

The Sarrai Group management met with the Kenya Power officials last week in a bid to have the utility firm restore electricity to the facility. Electricity at the factory was disconnected over a year ago on the back of huge bills.

On Monday, the investor met with the engineers at the firm to discuss the ways of acquiring new spare parts to revive the milling plant.

The new investor has already serviced tractors and has started ploughing the 4,000 acres nuclear farm in readiness for planting cane.

The move marks the clearest indication that the miller will soon roar back to life after three years of no milling as farmers stopped supplying cane due to non-payment.

Mumias, which was at one point the biggest sugar manufacturer in the country, has been on its knees for the last three years following a major financial crisis and competition for the cane.

Reviving the company has remained a major political issue in Western Kenya. Hundreds of thousands of farmers depend on the company and it is a major employer in the region.

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

The lender has been barred from auctioning the plant to secure assets used as security for other loans, prompting it to turn to the lease option.

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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. Banks it owes more than Sh3 billion include KCB, NCBA and Stanbic Bank.

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

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

Mr Mwale had placed the highest bid of Sh27.6 billion.

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