The once leading sugar production company in East Africa, Mumias Sugar Company may not be out of the woods yet.

Trouble is looming for Ugandan conglomerate Sarrai Group shotly after it secured the lease for assets of Mumias Sugar Company.

This follows the filing of case before the commercial court against Mumias Sugar’s receiver-manager Ponangipalli Venkata Ramana Rao.

The firm known as Tumaz and Tumaz Enterprises Limited linked with businessman Julius Mwale claims the bidding process in the lease of Mumias Sugar Company equipment was marred by irregularities.

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Through its lawyer Javier Munzala, Tumaz claims the process was discreet such that one could not tell who bagged the tender.

Apparently, Sarrai Group won the tender for a 20-year lease under which the group is expected to run the plant on behalf of Kenya Commercial Bank whose loan of Sh545 million Mumias defaulted.

Sarrai Group is a Uganda based corporation linked with Kenyan businessman Sarbi Singh Rai with diverse and inter-related agro-manufacturing operations across East and Southern Africa 

Sarbi Singh Rai. PHOTO/COURTESY
Although the Sarrai Group’s tender was third in value, it was picked by the receiver-manager raising many questions among the bidders and the miller’s stakeholders. 

US-based KE International was the highest bidder at Sh27.6 billion for a 20-year lease and Kruman Finances followed with a bid of Sh19.7 billion for 25 years.

According to court papers, Tumaz and Tumaz Enterprises Limited had bid Sh27.6 billion for the lease and Sarrai had bid Sh10,791,000,000 billion for the same period.

Other firms that were in the race to Mumias included the following: 


Javier argued that the defendant’s decision to disclose only financial aspects of the bid is illegal, unfair and violated the rights of Tumaz and Tumaz Enterprises Ltd.

“The defendant’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 court papers read.

Tumaz also said the manager did not open the various bids before other bidders for verification.

"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,” the suit read.

Tumaz said an investor was already chosen for the tender via a private treaty therefore locking out any other possibility of getting more from Mumisas Sugar Company.

According to the receiver-manager, a private treaty was a much better option than public tendering and it was also cheaper and faster.

"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," Rao said.

Mumias Sugar Company was placed under receivership in September 2021 to protect its assets and maintain operations after recording mounting losses that span years because of poor management.

Rao was appointed as the company’s receiver manager of the company that boasted leadership in sugar production in East Africa.