Revealed: Why tycoon Rai lost Mumias deal

Revealed: Why tycoon Rai lost Mumias deal

Tycoon Jaswant Rai. FILE PHOTO | NMG Billionaire Jaswant Rai lost a bid to lease ailing Mumias Sugar Company on account of his dominance in the sugar sector, the receiver manager has said.

In his defence on why he awarded the lucrative tender to Uganda’s Sarrai Group, KCB’s receiver-manager Ponangipalli Rao says in court documents that were Mr Rai to be awarded the lease, he would control 42 percent of the total sugarcane crushed in the country daily.

Mr Rao said this would have amounted to a dominant position in the sugar industry in view of the provisions of Section 23(2)(a) of the Competition Act 2010.

The Rai family owns West Kenya, Sukari Industries and Olepito, which have taken over the market previously occupied by Mumias with their Kabras Sugar brand. At its peak, Mumias had more than 60 percent market share.

The Mumias leasing tender was awarded to Uganda-based Sarrai Company, which has been in the sugar business for years. The receiver-manager said the multinational was best placed to revive the operations of the ailing miller, owing to its expertise in the field, as demonstrated by its performance in Uganda.

The Sarrai Group consists of different agro-manufacturing companies, which run three sugar factories in the neighbouring country, producing about 170,000 tonnes of sugar annually. It also has operations in Malawi.

“If the Rai Group, which owns West Kenya Sugar Company Limited, is awarded the lease of the assets of the company, then the Rai Group of Companies will control at least 41.95 percent of the total sugarcane crushing capacity per day in Kenya,” said Mr Rao in court filings.

The receiver manager said while undertaking the technical evaluation, due consideration is given to the successful bidder’s capability to undertake immediate revival of the operations to ensure social welfare and corporate governance by providing immediate employment opportunities to the community. Submitted bids

A total of eight investors submitted bids to lease the troubled sugar factory. The highest bidder was Tumaz & Tumaz, with an offer of Sh28 billion followed by Kruman Finances, who wanted a 25-year lease with Sh19.7 billion.

Other bidders were Pandhal Industries with Sh9.7 billion over 20 years and Kibos Sugar with Sh8.8 billion.

Mr Rao said five of the firms failed to meet the technical evaluation criteria, leaving three firms Pandhal Industries, Kibos Sugar and Sarrai to fight for the deal.Tumaz & Tumaz, Transmara Sugar and Kruman Finances were kicked out after they failed […]

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