The High Court has granted insolvency expert Ponangipalli Venkata Ramana Rao permission to continue serving as the receiver-manager of Allied East Africa Limited while the court determines the procedures for settling the company’s outstanding debts.

Justice Alfred Mabeya issued an administrative order on September 8, 2023, extending Rao’s term until October 23, 2023, when the court will make a final ruling. Rao’s initial five-year term as an administrator was set to expire on September 15.

“Further take notice that’s service of the said Notice of Motion application and the consequent orders is hereby effected upon each of the creditors of Allied E.A Limited (Under Administration) by this notice as ordered by the court,” reads a notice to the creditors by Munyao Muthama & Kashindi Advocates, the law firm representing Rao.

Allied East Africa is indebted to I&M Bank for Sh1.295 billion and owes Sh60 million to ABC Bank. These two lenders were previously engaged in a legal battle over the administration of the company.
Ernst & Young, who was acting as an administrator on behalf of ABC, was restrained, giving I&M the right to appoint Rao as the liquidator. Rao has become a dominant player, acting as a receiver manager for over half of companies currently fighting liquidation challenges. 

Athi River Steel Plant Ltd, Mumias Sugar Company, and Kwale Sugar Factory are some of the troubled firms that have been put under Rao’s watch.

Allied East Africa, the lead supplier, won a 2018 tender to supply gas cylinders for the Sh3 billion government-backed affordable gas plan dubbed the Mwananchi Gas Project. It then took the loans from the two banks to implement the project, together with three other firms – Surge Energy, Metalmate, and Accurate Power System – that were also involved in the tender.

The troubled firm was to supply 148,750 gas cylinders valued at Sh327 million ($3.27 million), but the company only delivered 11132 cylinders, all of which were faulty documents tabled before the National Assembly’s Public Accounts Committee on August 10, 2023.

Most of the cylinders the four firms supplied were consequently rejected for being faulty. Surge Energy supplied 79,998 cylinders, out of which only 27129 were of the right quality. Accurate Power System delivered 15,056 cylinders, which were also faulty.

The much-hyped Mwananchi Gas Project would have seen millions of households receive 6-kilogramme cooking gas and burners at a subsidized price of Sh2000 as opposed to the then-market price of Sh5000.
This was never delivered, with the government fining Allied East Africa Sh40 million as compensation for failing its contractual obligations.