By Emeka-Mayaka Gekara
Amidst intense political calls for the revival of the Pan Paper Mills in Bungoma, President Uhuru Kenyatta toured the facility and paraded members of the Rai family, led by Jaswant Rai, as the new investors.
Jaswant is the chair of the Rai Group while his brother, Tajveer, is the managing director of West Kenya Sugar Ltd.
The Rai Group owns Raiply Ltd, which has spread its wings to Uganda, Tanzania and Malawi. It is also Kenya’s second largest sugar miller through its West Kenya Sugar and Sukari Industries in Homa Bay. It is also Uganda’s second largest miller through Kinyara Sugar Works.
Further, the family has vast interests in edible oils and soap (Menengai Oil Refineries, saw milling (Timsales), wheat farming, horticulture and real estate (Tulip Properties).
Circumstances under which they obtained the Webuye mills at a throwaway price remain unclear but the deal helps illustrate their powerful connections which they have uncannily exploited to terrorise their business rivals.
They paid Sh900 million for the troubled paper firm. Pan Paper is worth Sh18 billion, but it was indebted to the tune of Sh10 billion by the time it was being placed under receivership in 2009.
Ironically, not so much paper is coming out of the factory, where dirty sugar worth Sh250 million was seized.
Using crude business tactics, influence and protection from high places-including sections of the Judiciary – they have frustrated other players in the sugar industry with the intention of monopolizing the sector.
Take the case of Busia Sugar Industries (BSI).
A brand new multi-billion sugar factory lies idle at Busibwabo in Busia due to the brazen rogue activities of the Rai family.
The investment has been the subject of 14 legal battles, for which there seems to be no end in sight.
Though a producer of cane, Busia County has never had a sugar factory. This forces its farmers to transport their cane to Mumias Sugar Company in Kakamega or Kibos in Kisumu, often at painful costs to farmers.
Farmers in Busia pay between Sh900 and Sh1,200 per tonne as transport charges for cane delivered to Mumias.
It was then a big relief for farmers when the Indian multi-national, Sugar N Power (SNP), formerly known as Africa Polysack, obtained a licence to construct a sugar miller in the region using local franchise, BSI.
But their hopes have been dampened by a series of orchestrated court battles as well as petitions at the National Environmental Management Authority (Nema) sponsored by West Kenya Sugar Mills, which also targets the Busia market.
The facility sits on an 80-acre piece of land and has capacity to process 900,000 tonnes of sugarcane per year, with the potential to create 700 direct jobs and 2000 others indirectly, according to Ali Ahmed Taib, one of the directors of BSI.
Through a petition filed by activist Kenneth Olulu and two farmers from Kakamega County at the Nema tribunal, the Rai family claims the factory will interfere with the natural state of River Sio, from which the company intends to obtain water for its factory.
Further, the complainants say, farmers and other members of the community were not consulted before the project was licensed.
Using crude business tactics, influence and protection from high places, they have frustrated other players in the sugar industry with the intention of monopolizing the sector”
The petitioner is also opposed to the project on grounds that the investor failed to furnish residents with an effluent discharge plan. Olulu further alleges that SNP has no intention of cleaning up the river.
In its counter, SNP argues that the petitioners have not provided any evidence in the suit to back claims that the factory has no waste treatment facility. The firm says it is constructing a treatment plant in the area that will clean water flowing into River Sio.
“The Busia factory is some 900 metres away from the bed of River Sio. It is impossible for any infiltration to reach the river. The water treatment plant is nine kilometres from the proposed factory. The plant will be set up by the factory which will improve the quality of water returned to the river,” the firm argues.
The petitioners also want SNP compelled to pay for any damages already caused by construction of the miller.
But, Taib, in response, points out that River Nzoia — which is longer than River Sio — serves more factories than Sio does, yet no harm has been visited on communities living on its banks.
SNP further argues that nobody came out to object to the project within the 60-day period allowed for appeals when it applied for Nema licences in 2013.
There was some relief for SNP when a tribunal ruled that public views be sought on matter, but West Kenya obtained a court order from the Nairobi High Court suspending the process initiated by the Agricultural and Food Authority, which had called for public views on the licensing of Busia Sugar Industries.
In a new twist, West Kenya claimed that Busia Sugar had not obtained a new environment impact assessment licence after the previous one was suspended by the High Court in 2016.
“That… a conservatory order be and is hereby issued to stay the first respondent’s gazette notice No. 2196 dated March 9, 2018 concerning the proposal to grant a sugar milling licence to the 4th respondent (Busia Sugar),” reads the High Court order.
“Our efforts to ensure that the people of Busia have a sugar factory and create jobs have been frustrated by crude rivalry between investors,” Busia governor Sospeter Ojaamong, who presided over the ground breaking ceremony in 2013 told the Nairobi Law Monthly.
“We feel that the conduct of some Nema officials and some members of the Judiciary involved in the cases has not been above board,” says the Governor.
Busia County government was enjoined in the case as an interested party.
When President Kenyatta toured the county at the height of the 2017 political campaigns, farmers petitioned him to intervene on matter (by probably asking the Rai family to withdraw cases against Busia Sugar). There seems not to have been any mediation.
The irony of the fight is that West Kenya itself has illegally constructed a sugar factory on a piece of land it had originally acquired for a sugarcane weigh bridge for poached cane at Olepito in Teso South, without a license from the Agriculture Fisheries and Food Authority (AFFA), and/or clearance from Nema.
And this is not the first time either that the Rais are frustrating the construction of a rival sugar factory.
It unsuccessfully attempted to frustrate the licensing of Butali Sugar factory in Kakamega County over claims that it operated within its sugar zone. It took the intervention of then Prime Minister Raila Odinga for the factory to be commissioned.
But the rogue West Kenya Sugar, which has no contracted workers, is more notorious for cane poaching, an activity that has put it loggerheads with other millers.
It started first by raiding sugarcane from farmers contracted by Nzoia Sugar Company in Bungoma immediately followed by those attached to Mumias Sugar in Kakamega and Busia counties. Notably, there is usually no intervention by the regulator, whose directors are said to be in the employ of the Rais.
And politicians from the sugar belt are often silenced with either cash or donations of loads of sugar for their campaigns during elections.