Keep off Mumias Sugar assets – Court orders Rai’s Ugandan firm

The high court in Nairobi dismissed an application by Ugandan based Sarrai Group, to overturn an earlier order that suspended its lease award for Mumias Sugar assets, and instead ordered it to comply with the December 29th ruling that suspended the lease award.

The Uganda based Sarrai Group which is associated with the Rai family had moved to court on Monday January 3rd, 2022 under a certificate of urgency to Challenge a high court ruling by Justice Anthony Ndung'u of Milimani High Court in Nairobi issued on December 29th, 2021 that froze the lease award by Kenya Commercial bank (KCB's) receiver manager PVR RAO to the Ugandan firm on December 22nd, 2021.

The suspension order last week was issued after an application by Tumaz and Tumaz Enterprises limited (Tumaz), a firm associated with Mwale City investor Julius Mwale, successfully petitioned the court to nullify the award citing Fraud, mistakes and legal irregularities in the bidding process by PVR Rao the KCB's receiver manager for Mumias.

Tumaz had the highest bid of Kshs. 27.6 billion Vs. Kshs 11.5 billion for the Ugandan firm for the 20 year lease. In its petition to the high court, Tumaz argued that after submitting the tender and attending to the opening of the bids on October 6th,2021, it never heard back from the receiver manager within the 21 days required by law , or at all, until it learnt from the press on December 22nd, 2021 of the lease award to the Ugandan firm under unclear circumstances.

The lease award excluded the Cogen and ethanol plants which were seized by French lender Proparco and Ecobank respectively. The two held liens on the assets.

Other bidders including France based Kruman-Finances which had the second highest bid of Ksh. 19 billion have moved to challenge the lease award to Uganda firm which was Kshs 16 billion below the highest bid. Kruman Finances said that the financial and technical evaluation was not conducted at all by a third party as it is procedurally required.

In its response to the petition by Tumaz on December 29th, the high court suspended the lease award to Ugandan firm and allowed Tumaz to apply to have the bidding process to be done afresh. The court scheduled a hearing on January 21st, 2022.

In its January 3rd petition to high court, the Ugandan firm argued that the high court lacked jurisdiction and erred by suspending the lease award on December 29th because it had already taken over the assets of Mumias on December 22nd, 2021.It argued that the suspension order "will cause untold suffering, embarrassment, great financial loss..to the Applicant (Sarrai)" .
"I know of my own knowledge that the Applicant (Sarrai) took over the assets of Mumias Sugar Company Limited (In receivership) on 22.12.2021 therefore orders obtained on 29.12.2021 have been overtaken by events". Pleaded Rakesh Kumar Bvats in court papers, a manager of Sarrai Group.

They asked the judge to overturn the suspension ruling issued on December 29th, 2021.

The judge dismissed the application and ordered Sarrai to comply with the December 29th ruling suspending the lease award to the firm. The case will be heard on January 21st, 2022.