Collapsed Mumias Sugar restarts leasing of its assets

Troubled Mumias Sugar Company that is under receivership has advertised for fresh bids for the lease of its assets.

Attempts by receiver-manager Ponangipali Ramana Rao to lease the company in May hit the rocks after a section of the leadership in Western protested citing opaqueness.

The Senate summoned Rao on June 9 and ordered him to advertise the leasing afresh.

In a paid-up advertisement in the local dailies on Monday, the company called for bids to lease the nucleus estate, sugar factory ethanol plant, co-gen plant, mineral water plant, residential estate, guest house, clubhouse, golf course and other movable property.

“With a view to injecting a new lease of life and in order to facilitate a turnaround of the mill to profitability through modernisation and efficient management, the receiver wishes to invite the investors, who are interested in the leasing of all or any of the above facilities for a mutually acceptable period at an agreed monthly lease rent,” the notice reads.

“The above facilities were held as security by different lenders and the leasing of each respective facility will be finalised only after obtaining the required consents. In addition, there are several other applicable regulatory approvals and consents required, before the lease is operationalised,” it reads.

The company was placed under receivership in September 2019, with a view to protecting its assets and reviving its operations.

The fresh call for bids comes days before President Uhuru Kenyatta’s planned visit to Western that is to begin on Monday.

Kakamega Governor Wycliffe Oparanya said the region expects a major announcement on the company and the sugar sector during the visit.

The move has brought ended contestation by those who supported the initial call for bids where Devki Group was touted as the likely investor to take over the company.

The notice said the assets shall be leased on an "as-is-where-is” basis and the interested parties shall inspect and satisfy themselves over their condition.

Parties may inspect the assets, with prior approval of the receiver, and may seek further clarifications before submitting the final bid.

Sugarcane farmers in Western counties have said they are ready to welcome any investor who will give the company the kiss of life.

A week ago, company legal officer Patrick Mutuli said the receiver manager's efforts to revive the mill by restarting the distillery for the production of ethanol were thwarted by a lack of funds and a polarised political atmosphere in Mumias and Western Kenya in general.

He said the receiver management has so far tilled 670 hectares of the nucleus estate land and replanted sugarcane on 580 hectares but stopped for lack of funds as the lenders for the distillery were reluctant to provide further funding given several court cases, with uncertain outcomes.

Though Rao has been resisted by a section of Western leaders, he appears to be one of the trusted administrators by other organisations holding assets of other companies in receivership.

Rao was appointed receiver-manager of the Kaluworks Limited, one of Kenya’s leading manufacturers of aluminum utensils and roofing sheets, in May.

He was also appointed the administrator of the Mare Nostrum Limited, placed under receivership in July.

The revival of the company will give hope to thousands of people who lost their jobs with its collapse three years ago.

Its revival is also significant to the region’s economy, sugarcane being the only cash crop in most Western counties.

Mumias remains the largest sugar mill in the country and the only one with the latest technology. While the rest of the sugar mills in the country use roller mills, Mumias has a defuser. 

The interested parties shall demonstrate how they intend to apply good corporate governance and social responsibility to improve the living standards of the people of the region by providing employment opportunities.

Edited by Henry Makori