Kenya’s High Court halts leasing of state-owned sugar companies amid legal challenge

KENYA – The High Court in Kenya has intervened to halt an international tender inviting bids for long leases of state-owned sugar companies.  

Justice Chacha Mwita issued an interim order to freeze the tender, advertised by the Ministry of Agriculture on January 16, after a citizen, Martin Nyongesa Barasa, raised concerns about the lack of public consultation in the decision-making process. 

Barasa, describing himself as a public-spirited citizen, argued that the decision to lease public sector-controlled sugar companies was made abruptly without involving the public in the decision-making process.  

He emphasized the importance of public participation, stating that “all sovereign power belongs to the people.” 

“The application herein is extremely urgent and is intended to stop the respondents from breaching the right to public participation, legitimate expectation, and fair administrative action,” Barasa stated in the application. 

Justice Mwita certified the case as urgent and directed the Ministries of Agriculture and Treasury to file their responses and submissions within seven days. The interim order halts the tendering process under the International Tender Notice, No. MOALD/SDA/IT001/2023-2024 until April 19. 

Barasa pointed out that, before the tender was published, the Ministry of Treasury wrote a letter on January 8 to the managing directors of Nzoia Sugar Company, Chemelil Sugar Company, and South Nyanza Sugar Company Ltd.  

The letter allegedly compelled them to pass resolutions handing over powers to the ministry for the procurement of leases for the respective companies. 

The court had previously issued interim orders suspending the implementation of Section 21 of the Privatisation Act, granting the Privatisation Commission exclusive authority over privatization programs. Barasa argued that the government disregarded these orders and proceeded with the advanced stages of privatizing the sugar companies. 

Barasa further contended that the Ministry has no legal authority or power to direct the boards of the sugar companies to pass resolutions, stating, “The 3rd Respondent (PS Agriculture) is in clear abuse of delegated sovereign power as this would mean that he is just a puppeteer at whose whim everyone falls.” 

The government had initiated the process of leasing five public sugar factories to private companies for a 20-year period as part of a revival plan.  

The move aimed to attract private investment to enhance the struggling millers’ capacities and explore diversification into cogeneration of export power, bioethanol production, and allied coproducts. 

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