Entrance gate at Mumias sugar company. PHOTO | ISAAC WALE | NMG The Mumias deal effectively puts the multibillion-shilling Kenya and Uganda sugar business in the Rai family.
For Sarbi, the Mumias Sugar deal sets the stage for market share war with Jaswant, whose family controls half of the commodity’s sales in Kenya.
The cross-border sugar trade deal will be keenly watched given the recent hostilities between Kampala and Nairobi over trade, with sugar topping the list of disagreements.
Uganda-based conglomerate Sarrai Group has been tapped to run Kenya’s biggest but ailing sugar miller in what now puts sugar production in the two countries in the hands of the Rai family.
Sarrai Group secured a 20-year lease for assets of Mumias Sugar Company and consequently the mandate to revive the collapsed miller, having emerged winner of the bidding that lasted over four months.
The deal comes as Kenya and Uganda are engrossed in trade squabbles featuring sugar, maize, milk and poultry products. But delegations of the two countries met on Monday in Nairobi to iron out differences, and the outcome remains to be seen. After the meeting, Uganda said it had agreed with Kenya to delay retaliatory measures on agricultural produce bans.
Mumias Sugar Company’s court-appointed administrator Ponangipali Rao said the lease to Sarrai Group is in the interest of all stakeholders and will not include the ethanol and the cogen plants, which were last month seized from KCB Group by Ecobank and French development financier, Proparco, over $17.82 million and $16.93 million debts respectively.
The Ugandan conglomerate, which is associated with Kenyan businessman Sarbi Singh Rai, placed the third-highest bid of $102.5 million in the lease battle, with the receiver managers rejecting the highest bid of $246.01 million by Kenyan businessman Julius Mwale. Private treaty
The second-highest bidder was Kruman Finances, who sought a 25 year-lease with $175.59 million. Kruman Finances is associated with French and Turkish investors.
“The receiver was of the opinion that a private treaty is a much better option instead of public tendering. In addition, the private treaty will be less expensive, much faster and the receiver would be able to conclude the technical and financial assessments of the bidders in the shortest period,” said Mr Rao.
Mr Rai, the group’s chairman, said immediate focus will be rehabilitation of the machinery.“We will also be seeking to engage outgrowers and an experienced workforce to ensure that there is an effective collaboration […]