Court Suspends Leasing of Mumias Sugar to Sarrai Group

Sarrai Group Secured 20-year Lease for Mumias Sugar Assets

A Kenyan High Court and the Public Procurement Administrative Review Board (PPARB) have suspended the leasing of Mumias Sugar to Ugandan Company, Sarrai Group until all petitions filed are heard and determined.

This is after Tumaz and Tumaz Enterprises Ltd sued the miller’s receiver-manager Ponangipalli Venkata Ramana Rao claiming irregularities in the bidding process that saw Sarai Group winner of the 20-year lease.

However, the lease excludes assets in the Mumias’ ethanol and cogen plants. The assets were seized by Pan-African lender Ecobank and French development financier Proparco from KCB Group.

“Under Section 168 of the Public Procurement and Asset Disposal Act 2015, the procurement proceedings are hereby suspended, and no contract shall be signed between the Procuring Entity and the tenderer awarded the contract unless the Appeal has been finalized,” PPARB said in a notice issued to the Mumias receiver-manager.

In the suit, Tumaz said it had bid KSh27.6 billion for the lease compared to Sarrai’s bid of KSh11.5 billion.

“The defendant’s (Rao’s) decision to disclose only the financial aspects of the bid is illegal, procedurally unfair and violated the plaintiff’s legitimate expectation and the principles of natural justice,” the suit papers say.

 “The defendant failed to open the various bids in the presence of the bidders as a result of which it is not possible to ascertain whether or not the documents submitted by the bidders were responsive or not.”

Justice Anthony Ndungu on Wednesday certified the suit by Tumaz & Tumaz Enterprises as urgent and ordered the Receiver Manager not to proceed with the lease award to the Sarai Group.

“It is clear that if a contract is entered into as apprehended, the proceedings here-in would be rendered nugatory. On that basis, I grant stay in terms of prayer 5 of the chamber summons”, ordered Justice Ndungu. 

“On the strength of the averments made, I certify the matter as urgent and admit it to hearing during the court’s recess. Upon perusal of the chamber summons seeking leave to apply for the orders of certiorari, prohibition and mandamus, I am satisfied that the applicant has achieved the legal threshold necessary for grant of leave. I grant leave in terms of prayer 2, 3 and 4,” the judge said.

The petition will be heard on January 21, 2022.

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