Mumias Sugar Company Receiver Manager Ponangipalli Venkata Ramana Rao has been accused of ignoring the highest bid of Ksh36 billion from West Kenya in resuscitation plan and instead going for Ksh5.84 billion from Uganda’s Sarrai Group.
This means that the state miller consequently lost over Ksh30.2 billion through the bidding process.
According to documents filed by West Kenya Sugar Company lawyer senior counsel Paul Muite, West Kenya Sugar Company was the highest among the six bidders with Ksh36 billion. The amount would be used to clear Mumias’ debt with KCB, at a rate of Ksh150 million each month for a total of 20 years, thereby earning Mumias Sugar Company an excess balance of Ksh33.3 billion after settling the defaulted loan.
Mumias, which used to be the East African nation’s leading producer at more than 250,000 tonnes a year, has been beset by poor management and mounting losses in recent years.
In the full year to June 2018 it posted a loss before tax of Ksh10.11 billion ($97.49 million), compared with a loss of 9.53 billion shillings in the same period a year before.
In January 2018, Ecobank Kenya, KCB and Commercial Bank of Africa demanded to be paid debts amounting to Ksh1.7 billion, Ksh480.1 million and Ksh364.5 million loans respectively from the insolvent company.
Mumias was placed under receivership by the KCB Group in 2019.
Sarrai Group’s Ksh5.84 billion would take Mumias Sugar 124 years to pay its debts at the rate of Ksh28 million per month, according to Muite. As a result, the state miller would have a balance of Ksh3.1 billion in excess after the KCB loan settlement, which according to West Kenya Sugar Company, cannot in any way settle the debt owed to farmers, employees, suppliers and creditors.
In addition, according to a sworn affidavit by West Kenya Sugar Company chairman Jaswant Rai, the Mumias Sugar Company Receiver Manager controversially and hurriedly awarded Sarai Group the lease on December 21, 2021 and the Lease Agreement signed the next day on December 22, 2021.
The assets of the state miller were handed over the same day, which is against the laid down procedures of evaluation and approval by the Capital Markets Authority. In addition, the Competitions Market Authority was not involved in the leasing determination meaning that Mumias Sugar Company Receiver Manager went outside his mandate, according to Muite.
In addition, West Kenya Sugar Company is faulting the Mumias Sugar Company Receiver Manager for misleading the court and members of the public by stating that the company lacks the capacity to run Mumias Sugar Company while it’s the leading Sugarcane Sugar Producer in the sugar sector in the country, with close to 90,000 tonnes production turn over annually.
Mumias is partly owned by the government under the National Treasury, with 20 percent stake, while KCB Bank has 1.72 percent shares, Jubilee Insurance at 1.46 percent and two Standard Chartered Nominees Limited accounts at 1.4 percent.
Individual shareholders hold 71.35 percent of the company.
Read: Uganda Evictions Haunt Sarrai Group’s Mumias Operations
>>> Not So Sweet News For Mumias Sugar As Court Freezes Lease
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