Naivas got an exclusive distribution deal with Mumias Sugar factory for the sale of its sweetener when the ailing miller resumed operations, giving it a head start over other players in the market.
The ailing miller, which is now at a crossroads over the recent announcement by the government wanting the investor to vacate, entered into a deal with Kenya’s largest retail chain to have them distribute their sugar.
Business Day Africa understands that the consignment was transported to the Naivas store in Nakuru after milling before being distributed countrywide.
However, Naivas has denied having been selected as the sole distributor, arguing that they only had a head start in distribution because of their wide network in the country.
“We were not the sole distributors, we just got a head start as we had the critical mass to start them off. This is normal in business world where you negotiate for a two-week lead into the market,” said Naivas Chief Operations Officer Willy Kimani.
The Court stopped the miller from processing sugar this year after its top officials were held for contempt.
The Mumias sugar, which was one of the most revered brands in the market when it was in supply, resurfaced last year on the shelf after nearly a decade of absence, after the new investor- Sarrai Group won the leasing tender to revive the plant.
Sarrai Group secured the lease for assets of Mumias Sugar Company and was given the mandate to revive the collapsed sugar milling company in 2021, having emerged winners of the bidding process that lasted over four months.
Kruman-Finances, which was the second highest bidder, wanted a 25-year lease with Sh19.7 billion offer. The firm, which is associated with French and Turkish investors, had proposed a 15 percent free shareholding to national and county governments during the restructuring of the company and post-restructuring after 20 years before an Initial Public Offering (IPO).
Tumaz and Tumaz owned by US-based businessman Julius Mwale had placed the highest bid of Sh27.6 billion but was locked out on lack of technical ability to revive the miller.
President William Ruto has ordered the Sarrai Group to end their lease at Mumias and vacate the premises arguing that its operations have not benefitted local farmers.