Uganda's Sarrai Group takes over Mumias Sugar's assets in lease deal

Mumias Sugar Company

The entrance to Mumias Sugar Company.

Photo credit: File | Nation Media Group

Uganda-based conglomerate Sarrai Group will jointly run Mumias Sugar Company after the miller’s assets were leased to it, the KCB Bank-appointed receiver manager, Ponangipalli Venkata Ramana (PVR) Rao, said.

The 20-year lease, however, excludes assets in the firm's ethanol and cogen plants, which were seized by Ecobank and French development financier, Proparco.

“The lease is in the interest of all stakeholders and in conformity with the recent court ruling dated November 19, 2021. The lease, however, does not include the Ethanol and the Cogen plants,” Mr Rao said in the announcement.

Sarrai Group is a Ugandan conglomerate consisting of different agro-manufacturing companies, which runs three sugar factories in the neighbouring country, producing about 170,000 tonnes of sugar annually. It also has operations in Malawi.

The receiver manager said the multinational was best placed to revive operations of the ailing miller owing to its expertise in the field, as shown by its performance in Uganda.

“Although the lessee is not in sugar production in Kenya, it 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,” Mr Rao stated.

In Uganda, Sarrai runs Kinyara, Hoima and Kiryandongo sugar factories, with over 20,000 hectares of its own nucleus estates, and a total installed capacity of 19,000 TCD (tonnes crushed per day).

The leasing process for Mumias has been ongoing since last year, leading to battles among local billionaires and firms for control of its assets. 

In June, the Senate’s Agriculture committee temporarily suspended the process, ordering Mr Rao to publicly advertise the lease after complaints emerged that the process lacked transparency.

Additionally, Ecobank and Proparco moved to court last month and indicated that they had hired their own receiver managers in a forced takeover of the miller’s ethanol and power generation units (Cogen plant) respectively. 

The two plants, together with Mumias Sugar’s milling unit, have been under the KCB-appointed receiver manager since the miller was placed under receivership in September 2019 to protect its assets and maintain operations.

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