Mumias Sugar case: Gakwamba farmers claim West Kenya sugar bid was spoiler bid

Milimani Law Courts

Gakwamba Farmers Society says West Kenya Sugar Co. made a spoiler bid in the tender for leasing of Mumias Sugar Co. 

Through lawyer Danstan Omari, the society claims West Sugar had made close to a billion shillings in losses from 2017 to 2019 and therefore not capable of running Mumias Sugar.

“The Sh 36 billion bid by West Kenya Sugar Company was a spoiler  or they did not want to run Mumias Sugar Co,” says the society.

The farmers further state that operationalization of Mumias Sugar is in the benefit of farmers and that its halting has dire consequences to the farmers and the surrounding communities.

According to an affidavit sworn by the society’s Chairperson Elisha Onyango Huma, Gakwamba states that West Sugar admitted to the losses before Kisumu employment and labor relations court.

“The said admission was made in a case filed by their employees before Kisumu employment and labor court,” says Huma.

West Kenya is alleged to have had made losses in excess of 914,482,799.22 within three years and also admitted that they would cripple by paying Sh 507,488,511 to their employees though they submitted a bid of Sh 500 million for leasing of Mumias Sugar.

“As per the Agriculture food authority report 2020 (page 91) West Kenya Ltd had produced 318,801 MT of sugar in three years, that is 77,665 MT, 108, 844 MT and 132,292 MT for 2017, 2018 and 2019 respectively and made losses in excess of Sh 934,482,799.22,” the society states.

Gakwamba argues that the admission by the company that they admit losses of almost a billion within three years and could have crippled by paying half a billion within three years during Covid 19 pandemic and which pandemic is still ravaging and as thus do depict the capacity of giving Sh 1.8 billion per year and 36 billion for 20 years.

β€œI am persuaded that the 6th plaintiff’s (West Kenya Sugar Co.) bid of Sh 36 billion was a spoiler bid and they do not want to run Mumias Sugar Co. limited. The West Kenya application is an abuse of court process, frivolous, scandalous and devoid of any merit and should be dismissed forthwith with costs,” says Gakwamba.

They add that though the plaintiffs have obstructed commercial operations of Mumias and losses will or  have been incurred as a result of halted operations of Sarrai Group Limited.

Gakwamba further states that a thorough and rigorous process was done before arriving at the successful bidder being the Sarrai group as demonstrated in the replying affidavit of Ponangipalli Venkata Ramana Rao and KCB bank dated January 19, 2022.

β€œTo the best of my knowledge, the bid of Sh 36 billion(Sh 1.8 billion per annum) by West Kenya Sugar Co is not tenable or practical and was purely put as a spoiler bid,” adds Gakwamba.

Gakwamba argues that for the West Kenya Sugar Co. to generate the surplus amount to pay the lease rent on Sh 1.8 billion per year, you might be required to produce three times the amount of sugar production which is not practically possible for Mumias sugar Co as Mumias Sugar capacity of producing sugar is 266,000 tonnes.