East Africa

Uganda’s Sarrai Group wins Mumias 20-year lease


Summary

  • The 20-year lease, however, excludes assets in the firm’s ethanol and cogen plants, which recently were seized by Pan-African lender Ecobank and French development financier Proparco from KCB Group.
  • Mumias, which used to be Kenya’s leading producer at more than 250,000 tonnes a year, was beset by poor management, heavy debts, and years of mounting losses, prompting its closure.
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By ANTHONY KITIMO


Assets of the ailing Mumias Sugar Company have been leased to Uganda-based conglomerate Sarrai Group, the miller’s receiver-manager Pongangipalli Venkata Ramana Rao has disclosed.

The 20-year lease, however, excludes assets in the firm’s ethanol and cogen plants, which recently were seized by Pan-African lender Ecobank and French development financier Proparco from KCB Group.

“Although the lessee is not in sugar production in Kenya, he has a proven track record of running three sugar factories, a distillery and power generation in Uganda and is committed to commence rehabilitation of assets immediately to ensure revival of operations within the shortest period,” said Mr Rao.

The KCB-appointed receiver-manager said the lease agreement “is in the interest of all stakeholders and in conformity with the recent court ruling dated November 19, 2021.”

The Sarrai Group is owned by the billionaire Rai family, which among other installations, owns sugar and plywood businesses in Uganda and Malawi. The group also operates Rai Cement in Kenya.

Sarrai runs Kinyara, Hoima and Kiryandongo sugar factories in Uganda.

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The Rai Group in Kenya owns three millers – West Kenya, Sukari Industries, and Olepito Sugar.

Mumias had received revival bids from a number of investors, including businessman Julius Mwale, steel tycoon Narendra Raval and the Rai family, through Sarrai.

Unlike the other State-owned sugar firms where the bidding was through public tendering, the receiver-manager said the Mumias Sugar issue was handled through a private treaty between the investor and the bidders.

Mumias, which used to be Kenya’s leading producer at more than 250,000 tonnes a year, was beset by poor management, heavy debts, and years of mounting losses, prompting its closure.

The miller was in September 2019 placed under receivership by KCB to protect its assets and maintain its operations.

KCB was, however, barred from auctioning the plant to secure assets used as security for other loans, prompting it to turn to the lease option.

“We hope to see the original glory of Mumias back soon,” said Mr Rao.

Sarrai Group chairman Sarbi Singh Rai said the firm’s immediate focus would be to rehabilitate the machinery and engage outgrowers and the workforce to ensure effective collaboration to revive the factory.

“Mumias Sugar was the most respected sugar company not only in Kenya but the entire region, and it is our firm commitment to all the stakeholders that we shall use all our experience and resources to make sure that we revive the company and take it back to the heights it once enjoyed,” said Mr Rai.

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