- Paul Muite, the lawyer acting for West Kenya, said his client was the highest bidder in the lease but the lease was awarded to Sarrai Group who were the lowest bidder.
- Lawyer Mungai Kibe, representing the petitioners, told court that Sarrai and Mumias Sugar have disobeyed court orders that ordered them to stop any works at the sugar mill related to the lease.
West Kenya Sugar Limited now wants to be enjoined in the Mumias Sugar leasing case as petitioners.
In the case, four farmers have challenged the lease that was issued to Ugandan firm Sarrai Group by Mumias Sugar receiver manager and KCB.
Paul Muite, the lawyer acting for West Kenya, has told Justice Wilfrida Okwany that his client was the highest bidder in the lease but the lease was awarded to Sarrai Group who were the lowest bidder.
West Kenya claims that their bid was Sh36 billion while Sarrai’s bid was Sh5.84 billion.
Muite wants the court to consider their application for joinder before they can proceed.
Lawyer James Orengo for Kakamega county has opposed the application by Muite, saying the court should determine with hearing their application and not any applications for joinder.
“Under the circumstances in which the orders were given on January 14, it’s important that the application is heard first,” he said.
Lawyer Mungai Kibe, representing the petitioners, has told court that Sarrai and Mumias Sugar have disobeyed court orders that ordered them to stop any works at the sugar mill related to the lease.
Kibe said they have evidence which they will show that Sarrai is still ongoing with the works.
However, Kibe said they needed time to respond to the responses that will be filed by the defendants.
In an affidavit sworn by West Kenya Sugar Limited chairman Jaswant Rai, he has urged the court to allow them to be enjoined in the matter because the matter affects them.
Rai said that audited accounts indicate that liabilities of Mumias Sugar to secured creditors, farmers and employees are in excess of Sh29 billion
“Sarrai’s bid will never settle the liabilities of Mumias. Aafter 20 years the monetary lease payments would only equate to approximately 27 per cent of all Mumias liabilities,” court papers said.
Rai further said that Sarrai Group has no track record of sugar production in Kenya whatsoever and it’s a new company whose financial viability and technical ability has no record in Kenya.
Lawyer Danstan Omari who represents Gakwamba farmers also told court that the application for joinder by West Kenya should not be heard just the same way their own was not entertained when they first made the application on January 14.
Gakwamba farmers on Friday last week had accused the five farmers before court of being used by West Kenya to fight the lease that was granted to them.
In an affidavit filed in court, Gakwamba Farmers’ Cooperative Society Limited has accused West Kenya of using their society to fight the lease because it lost the tender.
Mumias receiver manager Ponangipalli Rao who awarded the lease to Sarrai Group in his affidavit to court said if the court allows application to cancel Sarrai lease, Mumias will continue wasting away.
In a separate replying affidavit, Rao said the equipment lying at the company requires extensive repair having been in disuse for approximately three years before his appointment as receiver.
He added that sugarcane farmers will lack market for their produce if the lease is cancelled.
“The 375 hectares of sugarcane that I have planted in preparation for the revival of the company will go to waste if the company is still dormant at the time of harvest,” he said.
Rao said the employees also risk losing their jobs and the local community that relies on the operations of the company to earn a living will lose a source of income.
“The company may not be able to repay its debts or may have to pay huge sums as interest. There are outstanding sums owed by the company to creditors and, in some cases, such as the amounts owed to KCB, they continue to earn interest,” the affidavit reads.
Rao said he was appointed receiver in September 20, 2019.
He claimed there have been so many cases filed relating to the matter since he advertised the tender.
At some point he said he was even summoned by the Senate over the opening of the bids.
However, he claimed the court granted him authority to conduct the bid announcement without any interference from the senate and on a date to be fixed by him.
As a result of the concerns expressed by several bidders that they would not be able to attend September 30, 2021, he rescheduled the bid announcement to 9am on October 5 and informed all the bidders of the change.
“On that day I received a letter from Treasury requesting that the bid be postponed to the next day so that they could be present. I made a decision to postpone so that we could accommodate them as the government holds 20 per cent shares at Mumias,”he said.
The bids were opened and Sarrai was picked as the winner of the tender which has led to the current legal battles.
(edited by Amol Awuor)