Jaswant Rai before the National Assembly Committee on Implementation, 2018. Scepticism is growing about the true intentions of billionaire Jaswant Rai’s bid for the takeover of the assets of Mumias Sugar Company.
Those opposed to Jaswant’s takeover, including the National Treasury and KCB-appointed receiver-manager Pongangipalli Rao see him as a wolf in sheep’s clothing.
They are afraid that, at worst, he will be tempted to pull the plug on the bankrupt miller should his West Kenya Sugar Company get the green light to lease Mumias Sugar’s assets for 20 years.
“There is a proper basis to conclude that West Kenya’s bid was a spoiler bid intended to gain access to a competitor and possibly harm it,” says Mr Rao in an affidavit.
“There would be no reasonable basis for entering into a lease with West Kenya if in every likelihood it would not be able to sustain the operations of the [Mumias Sugar] company, leading to another halting of operations.”
At the heart of this “spoiler bid,” says Mr Rao, is a conflict of interest by Rai Group, which owns West Kenya.
Rai Group has milling factories 36 kilometres east and 35 kilometres northwest of Mumias Sugar. This means they are direct competitors of Mumias Sugar.
As a frail Mumias lies in the Intensive Care Unit (ICU), the two factories continue to harvest half the sugarcane in an area that had for long been largely an exclusive zone for the debt-ridden miller. Mumias Sugar’s machines have not roared for the last three years.
Court documents, Rao told the court, show how Mumias Sugar has on several occasions accused West Kenya of illegally buying cane from farmers Mumias had contracted, a form of malpractice known as cane poaching.
Essentially, with cane poaching, a miller reaps where they did not sow. In this case, West Kenya has been buying sugarcane that Mumias Sugar had invested billions of shillings in by providing farmers with services for land preparation, fertiliser supply, extension services, harvesting and transport.
“The company (Mumias Sugar) once operational will be competing with West Kenya for sugarcane and other resources,” says Mr Rao. This is the same position taken by National Treasury Principal Secretary Julius Muia in a supplementary affidavit on the matter.Treasury owns 20 per cent of Mumias Sugar, which was first listed at the Nairobi Securities Exchange (NSE) in 2011. “I verily believe that the direct competitor of MSCL (Mumias Sugar Company Ltd), especially one that has mills […]