Battle lines drawn as Butali, West Sugar wars turn political

Kenya: Tomorrow at 10am, the country is likely or unlikely to know the fate of a multi-billion shilling case pitting two sugar factories that has also sucked in politicians from western Kenya.

West Kenya Sugar Company says it will ignore an invitation by the Government to discuss its objection to the granting of an operating licence to Butali Sugar Mills Ltd (BSML) within the same sugar zone. Further, West Kenya Company wants its competitor, Butali Sugar Company, closed immediately. “If on Monday October 6, 2014, BSML continues to conduct the business of a sugar miller, then, we shall commence legal proceedings to compel your esteemed authority to enforce the law,” warns West Kenya Sugar Company through their lawyers.

The matter has sucked in politicians, with Kakamega County Governor Wycliffe Oparanya and four MPs from the area vowing to support Butali Sugar Company to continue operating. “Butali is already registered and we will not allow it to be deregistered. It will continue to operate with or without the licence,” said Oparanya while addressing farmers at Chebwai grounds, Butali, on Friday.

Technical committee

This comes after the Sugar Directorate of the recently formed Agriculture Fisheries and Food Authority (AFFA) invited West Kenya Sugar company to a consultative forum ‘to consider the application for an operating licence by Butali Sugar Mills Ltd’, on order by the Court of Appeal.

“As a stakeholder within the West Kenya Sugar belt zone you are invited at the Malava Friend’s Church in compliance with the Court of Appeal ruling,” read the invitation signed by Interim Sugar Directorate Head Rosemary Mkok.

On September 19, the Appellate Court in Kisumu ordered the Agriculture Fisheries and Food Authority to review the operating licence given to Butali Sugar Company. Subsequently, AFFA formed a technical committee that is expected to determine whether Butali’s licence is valid.

The committee, according to AFFA boss Alfred Busolo, will first take views from stakeholders, which include the farmers in the west Kenya sugar zone where the two companies operate, hence the meeting scheduled for tomorrow.

West Kenya says it will not attend the stakeholders meeting. “Our client hereby notifies you that, respectfully, it will not attend the purported stakeholders meeting but hastens to add that it looks forward to attending a lawful meeting according to the Crops Act, 2013,” read the letter by Kinoti and Kibe advocates, West Kenya Company lawyers. It further contends that the meeting is political and threatens court action against the authority. “The meeting set down is not a bona fide meeting but a political meeting in which West Kenya Managing Director Tejveer Sign Rai, our client, will be intimidated to withdraw his objections in a bid to project West Kenya as the only company opposing the issuance of a licence to Butali Sugar Mills,” reads the letter to AFFA.

 

Mr Rai alleges that his arch rival, the Butali Managing Director Mr Jayanti Patel is the person behind the meeting. “Our client has credible evidence and information that directors, employees and agents of Butali Sugar company and the politicians in Kakamega County are mobilising people to come and present petitions to

the authority demanding the registration of BSML,” further notes the rejection letter copied to among others Agriculture Cabinet Secretary Felix Koskei.

Crops Act 2013

West Kenya company has infact said it will take legal proceedings against Mr Busolo and Ms M’kok if Butali Sugar continues operating. “Take notice that if by 4:00 pm on Friday, October 3, we would not have received a written notice cancelling the meeting, we shall commence contempt proceedings against you if the meeting is not cancelled,” warns West Kenya Sugar through their lawyers.

This, it argues, is predicated upon the Sugar Act, 2001 and section 16 of the Crops Act 2013, contending that BSML does not have a valid registration licence owing to a pending High Court case by West Kenya against Butali. According to West Kenya, the Court of Appeal ordered that sugar board authority hears and determines an application of licence by BSML dated April 10, 2010. However, according to West Kenya, the authority is yet to be served with the court of appeal orders, hence calling to question the legality of the meeting called by Mr Busolo and Ms M’kok.

Further, the company, referring to the Crops Act 2013, contends that the authority is yet to give a notice of issuance of a licence to BSML in the Kenya Gazette.

The developments emanate from a clause in the Act requiring that any factory should be set up 25 kilometres from an existing one. The Agriculture ministry in 2000 demarcated the West Kenya sugar belt to be operated by the West Kenya Sugar Company.

Four years later, West Kenya got authority to expand its milling capacity, expanding its mill command area to Malava division and a further assurance that no other company would be allowed to establish within a radius of 25km from its base.

However, the defunct Kenya Sugar Board allowed Butali Sugar Company to operate 10 kilometres from West Kenya in 2004, which the firm contested the issuance of the licence in court. As such, KSB revoked Butali’s license in 2008, compelling Butali to also seek legal redress on grounds that the revocation of its licence meant losing Sh590 million worth of investment.

The sort of comedy continued and KSB later rescinded its decision to cancel Butali’s licence to exonerate itself from any offence. _West Kenya also jerked to action, noting that it stood to lose Sh3 billion investment if the two firms operated in the same sugar zone. However, the high court in 2010 dismissed the zoning rule terming it ‘illegal and unenforceable’.