Kenya’s leading miller Rai Group expands operations with establishment of new US$44m sugar factory

KENYA – Kenyan industrial conglomerate, Rai Group, is set to commence operations at its newly built sugar production unit, Naitiri Sugar Company, by the end of the first quarter of this year.

Built at a cost of Ksh 5 billion (US$44m), the facility is expected to commence with a processing capacity of 3,000 tonnes of sugar cane which will eventually be doubled to 6,000 tonnes, reports Ecofin Agency.

The new factory will further extend its hold on the Kenyan sugar market where it already controls nearly 45% of total sugar sales through three companies: West Kenya Sugar, Sukari and Olepito.

The company’s contribution in the sector is extensive as it recently won the 20-year lease contract of Mumias Sugar via its Ugandan subsidiary Sarrai Group.

Sarrai Group has secured the lease for assets of Mumias Sugar Company and the mandate to revive the collapsed sugar miller.

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However, the agreement excludes assets in the firm’s ethanol and cogen plants, which were seized by Ecobank and French development financier, Proparco.

Although Sarrai Group is not in sugar production in Kenya, it has a proven track record of running three sugar factories i.e., Kinyara Sugar, Hoima Sugar, and Kiryandongo Sugar, a distillery, and power generation in Uganda.

The company has over 20,000 hectares of its own nucleus estates in Uganda and over 12,000 registered and supported out grower farmers.

In a twist turn of events, the Ugandan firm and Mumias Sugar receiver-manager PVR Rao are staring at contempt of court charges for allegedly disobeying High Court orders suspending Mumias Sugar lease award, reports Citizen News.

This follows a petition filed by Tumaz and Tumaz Enterprises, a joint bidder for the assets of Mumias, which placed the highest bid of Kshs 27.6 billion vs Sarrai’s Ksh.11.5 billion for Mumias lease.

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In the case, Tumaz argues that Sarrai Group had started work in earnest at the sugar miller despite a court order suspending the lease on December 29th, 2021, and which was served to both Sarrai and Rao on December 30th and 31st.

Other bidders including France based Kruman Finances, who offered Ksh.19 billion bid for the 20-year lease have also protested the lease award to Sarrai.

The Kakamega County, according to Standard Media has also been sucked into the saga surrounding the leasing and obtained an order restraining Tumaz & Tumaz Enterprises Ltd and the miller’s receiver-manager Ponangipalli Rao from interfering with the lease agreement.

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