- National Treasury PS said the desired result of repaying all creditors through the leasing of MSCL assets may not be achievable within 20 years that is proposed the lease.
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Kakamega county asked the court to allow Sarrai to proceed with the lease, urging the court to lift the orders stopping works at the plant.
Image: HILTON OTENYO
The government has now given its stand in the Mumias Sugar Company lease impasse between Sarrai Group and West Kenya, saying the sugar mill is the priority.
The Attorney General was submitting before Justice Alfred Mabeya on Wednesday afternoon where he urged the court to put the revival of Mumias Sugar as a priority.
The state said it was leaving the issue to the discretion of the court but the temporary injunctions have stalled the operations of the ailing miller which should be brought back to operation.
In affidavit by National Treasury PS Julius Muia, the state said the leasing of Mumias Sugar supposed to help in repaying all the creditors ought to be understood in the context that there is ultimately a need to repay all creditors.
“Mumias Sugar is in dire financial position as set and debts exceed the value of its assets as it had been in operation for around three years prior to the appointment by KCB of a receiver is September 2019,” the affidavit reads.
Muia further said the desired result of repaying all creditors through the leasing of MSCL assets may not be achievable within 20 years that is proposed the lease.
However, there should be a balance between the lease rent for the periods of 20 years and the funds retained at MSCL for sustainable operations to ensure that MSCL runs profitably.
The state also advised parties of the importance of having on board the right company to oversee the impugned lease.
“Any party with the intentions of leasing the assets of the company should be able to generate the highest possible rental income to pay the secured creditors, service providers, farmers, workers and sustain the operations of the company,” court documents said.
Muia equally raised concern over West Kenya’s bid, saying he believes that a direct competitor of Mumias Sugar, especially one that has mills within the same vicinity as Mumias, is unlikely to have the best interest of MSCL due to conflict of interest.
On its part, Kakamega county asked the court to allow Sarrai to proceed with the lease, urging the court to lift the orders stopping works at the plant.
Through lawyer James Orengo, the county backed the receiver manager who picked Ugandan firm Sarrai to oversee the lease.
In the case, several farmers and West Kenya have challenged the lease that was issued to Sarrai, saying the receiver manager did not follow due process.
(edited by Amol Awuor)