• The Senate team directed the receiver manager to advertise intentions to lease the company and submit the technical evaluation report in two weeks.
• But the governor said that KCB, the lead creditors' consortium, was not selling the company but leasing it out.
Image: HILTON OTENYO
Kakamega Governor Wycliffe Oparanya wants the receiver manager of Mumias Sugar Company to ignore Senate's call on the leasing of the firm and hand it to an investor of his choice.
He said the position taken by the Senate Standing Committee on Agriculture cannot stop the process since a binding position can only come from the full Senate.
On Wednesday, the Senate Standing Committee on Agriculture asked the receiver manager at the troubled miller, Ponangipalli Venkata Ramana Rao, to conduct the leasing in a transparent manner.
Rao, who was before the Senate team, said the process of picking an investor was not complete.
He said bidding is still open and interested investors are free to present their offers.
But the governor said that KCB, the lead creditors' consortium, was not selling the company but leasing it out.
“The lease will lapse once the debt is fully paid and the company reverts to the shareholders. Whether the deal is good or not, it’s KCB which should tell us that because it’s the bank that will be taking the lease money and not the government,” Oparanya said.
The loss-making miller was placed under receivership by KCB Group in September 2019 to protect its assets and maintain its operations.
Under the leasing deal, the successful firm is expected to run the plant on behalf of KCB whose Sh545 million, in loans, was defaulted by the miller.
On Friday, Kakamega Senator Cleophas Malala said there were other bidders who offered better deals than Devki.
Western leaders are divided down the middle over the leasing of the firm. While one group is pushing for Devki, the other insists the process must be handled transparently in the interests of all stakeholders.
Devki Group, chaired by Narendra Raval, had expressed interest in reviving the miller with an initial capital injection of Sh5 billion.
But Devki withdrew its bid to lease the miller to allow room for public-run bidding.
“Given the ongoing public interest which the matter has attracted and the call for a publicly run bidding exercise, we have found it worthwhile to take out our application. We will however express interest should the exercise be conducted in consultation with all the stakeholders,” Raval said in a statement.
Oparanya said a number of foreign investors had made inquiries after Rao advertised the leasing through a private treaty, but shied away after realising there was no clear legal framework to guide the industry following the repealing of the Sugar Act 2010.
He said KCB indicated that it was scouting for an investor with knowledge of the sugar industry, preferably a local firm.
“I was a co-chair of the National Sugar Task Force, which recommended that the government privatise all state-owned sugar factories but Mumias, being largely private, be handled differently," Oparanya said.
"That is why I formed a special task force for Mumias, which recommended that the county government represents the interests of all stakeholders.”
He said the county had set aside Sh50 million in the current financial year and another Sh50 million next financial year to support cane development.
“We have signed an agreement with the Commodity Fund to manage the fund for us because they have the expertise to run such programmes,” Oparanya said.
Under the Insolvency Act, stakeholders of companies under receivership lose ownership rights completely until the debt is fully repaid.