Sarrai Group Secures 20-year Lease for Mumias Sugar Assets

Kenya has leased Mumias Sugar Company assets to Sarrai Group, a conglomerate of diverse and inter-related agro-manufacturing companies across East and Southern Africa.

However, the 20-year lease excludes the company’s ethanol and cogen plants, the receiver-manager Ponangipalli Venkata Ramana Rao said in a statement noting that “the lease is in the interest of all stakeholders and in conformity with the court ruling.”

“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 the revival of operations within the shortest period,” said Mr Rao.

Mumias Sugar Company was placed under receivership, and  PVR Rao was appointed as the sugar miller’s receiver-manager. 

The administrative order issued by Justice Alfred Mabeya on Nov 19, 2021, against the company appointed Mr Rao as the administrator. It allowed him to proceed with the process of leasing the Company’s assets.

Sarrai Group Chairman, Mr Sarbi Singh Rai says their immediate focus is investing in the rehabilitation of the machinery back to effective operational status.

They will also engage outgrowers and an experienced workforce to ensure effective collaboration to revive the factory.

“…We shall use all our experience and resources to make sure that we receive the company and take it back to the heights it once enjoyed,” he said. 

Sarrai Group has a strong presence in the sugar industry in Uganda but not in Kenya. The Group’s sugar production includes Kinyara Sugar, Hoima Sugar, and Kiryandongo Sugar, all based in Uganda.

“With over 20,000 hectares of its own nucleus estates in Uganda, the Group’s sugar production includes Kinyara Sugar, Hoima Sugar, and Kiryandongo Sugar, with a total installed capacity of 19,000 TCD (tonnes crushed per day), producing over 170,000 tonnes of sugar per annum and over 12,000 registered and supported outgrower farmers being supported by various activities,” PVR Rao said.

“Sarrai Group has no association with entities under Rai Group, including West Kenya Sugar Company,” it said in a statement.

The troubled sugar miller Mumias Sugar Company’s trading of its shares on the Nairobi Securities Exchange (NSE) remains suspended.

The miller posted a net loss of KSh.15.1 billion in the financial year 2018/2019 compared to the previous year’s loss of KSh.6.8 billion.

It owes the Kenya Revenue Authority KSh 10 million, while the Kenya Commercial Bank (KCB Group), which appointed a receiver-manager, is owed KSh 20 billion.

Other firms that had placed bids for Mumias include Pandal Industries, KE International (US), West Kenya Sugar, Sarrai Group (Uganda), Krumen Finances, New Mumias Sugar/Devki Group, Kibos Sugar and Fredrick Coombes/ Sucriere Des Mascareigmes Ltd.

The Kenyan government has resolved to privatise five under-performing State-owned sugar mills through a long-term lease model. The five sugar mills are Chemelil, Muhoroni, Nzoia, Sony, and Miwani. Both Muhoroni and Miwani with a combined share of 30 per cent of the sugar industry market.