The Public Procurement Administrative Review Board (PPARB) and the high court suspended the leasing of Mumias Sugar to Ugandan Company , Sarrai Group which is associated with the Rai family.

The suspension will last until petitions challenging the award are both heard and determined.

In a notice to Mumias receiver manager, Ponangipalli Venkata Ramana Rao (Rao), PPARB stated that a Request of Review was filed with the board in respect to the leasing and operating of assets belonging to the troubled miller.

“Under Section 168 of the Public Procurement and Asset Disposal Act 2015, the procurement proceedings are hereby suspended, and no contract shall be signed between the Procuring Entity and the tenderer awarded the contract unless the Appeal has been finalized,” the notice stated.

In a separate high Court ruling Justice Anthony Ndungu on Wednesday at the Milimani High Court certified as urgent and ordered Rao, not to proceed with the lease award to the Ugandan firm, after hearing a petition by Tumaz & Tumaz Enterprises (Tumaz). Tumaz placed the highest bid, and challenged the award of the tender to the Ugandan company at the high court citing fraud, mistakes, and illegalities in the tendering process.

“It is clear that if a contract is entered into as apprehended, the proceedings here-in would be rendered nugatory. On that basis, I grant stay in terms of prayer 5 of the chamber summons”, ordered Justice Ndungu. That order effectively stopped Rao from executing any lease agreement and/contract with respect to the leasing and operation of the assets of Mumias Sugar. The court fixed a hearing date for January 21st, 2022.

In the court papers dated December 29, 2021, Tumaz argued that the tendering process was tainted with fraud, mistakes and illegalities. It further argued that there was lack of transparency in the manner in which the bidding process was conducted, arguing that upon submitting the bid and attending tender opening, the firm never heard from the receiver manager “either within 21 days stipulated under the law or at all” , until when it learnt from the press on or about December 22nd, 2021 that the lease had been awarded to Sarrai group under unclear circumstances.

“The 1st Respondent failed to give all the Bidders an open and transparent opportunity at winning the Bid, thus compromising the integrity, fairness, transparency and accountability of the process in violation of the Constitution of Kenya and other laws of the land”. The firm further argued that Sarrai Group was least qualified to be awarded the lease considering that it was not “the highest bidder,” the court paper stated.

Tumaz further argued that the process was so secretive that it was impossible to know who won the tender.

According to the court papers, Tumaz had the highest bid of Ksh27.6 billion against Sarrai’s Ksh11.5 billion for the 20-year lease .

“The defendant’s (Rao’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 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 papers indicated.

Tumaz further stated that the KCB-appointed receiver manager violated its right to information by failing to notify it of the outcome of its bid.

“To date, no reasons and/or explanation from the 1st Respondent ( Rao )has been issued to the Applicant to inform that Applicant that its bid was unsuccessful or to state that its bid was incomplete and or non-responsive,” the firm stated.Tumaz and Tumaz Enterprises is associated with Mwale City investor Julius Mwale.

Another firm, Kruman-Finances which had the second highest bid of Ksh19.7 billion has also moved to court to challenge the lease.

Sarrai Group had been announced as the winner of the leasing process by Rao, for leasing of Mumias assets for a period of 20 years. The lease, however, excluded assets in the firm’s ethanol and cogen plants which were seized by Ecobank and French lender Proparco respectively, that held liens on the assets.

The seizure of the two key assets further complicated the leasing process which had listed those assets as part of the leasing tender.

It is not clear if the bidders were notified of the changes in the tender offer by Rao, after the seizure of the two assets.

The miller was placed under receivership by KCB Group in September 2019 to protect its assets and maintain its operations.