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State, Kwale sugar miller in talks to iron out Sh32bn tender row – Business Daily

The Kwale International Sugar Company Limited [KISCOL] plant in Ramisi Kwale county. PHOTO | LABAN WALLOGA | NMG
The government has 60 days to negotiate downwards a Sh32 billion claim by Kwale International Sugar Company Ltd (Kiscol) for breach of contract.
Appearing before Justice Olga Sewe in Mombasa, the miller’s lawyers and Attorney General agreed to suspend the judgement obtained by the miller for 60 days to allow for talks.
Kiscol sued and won a case against the government for breach of statutory and contractual duties over its lease of 15,000 acres of land for sugarcane farming.
The claim adds the burden on Kenya’s new administration which is facing mounting legal bills that have grown to a colossal sum of Sh1.2 trillion.
“The consent is adopted as orders of the court and endorsed as part of the proceedings for today,” said Justice Sewe sitting in Mombasa.
Kiscol which has sued Treasury Cabinet Secretary and the AG is seeking special damages for breach of statutory and contractual duties over its lease of 15,000 acres for sugarcane farming.
The company won the case after the AG failed to respond in time forcing the court to award Kiscol its prayers against the government in an interlocutory judgement.
An interlocutory judgement is entered when a party which has been sued fails to file a defence to the case within the stipulated time and upon application by the plaintiff (a party which has sued).
Attorney-General Kihara Kariuki later asked a court in Mombasa to set aside the preliminary judgment but is now exploring the out-of-court settlement.
Through deputy chief litigation counsel Janet Lang’at, the AG argued they were bound to suffer irreparable prejudice, loss and damage which could lead to economic constrain in the country as the claim is worth billions of shillings of taxpayers’ money.
The court allowed the AG’s memorandum of appearance and statement of defence dated May 31 to be deemed as duly filed and properly on record. The case will revert to court if the talks fail.
“The delay in filing the defence was not intentional but is drawn on the fact that this is a high public interest matter with huge financial claim which requires consultation with various stakeholders who participated in the drawing of the lease agreement which then caused the slight delay,” says the AG.
Kiscol said it set up its greenfield sugar manufacturing plant on the parcel of land within Kwale county and holds a sublease dated August 20, 2007, between itself and the government.
It accuses the government of failing to provide it with full, unhindered and peaceful possession of the leased area.
The company says that when it attempted to access the land to implement its project, it found squatters who asserted equitable rights to occupy portions of the leased area.
According to Kiscol, the squatters occupied the leased land of approximately 5,816 acres in a scattered manner in seven areas.
“The plaintiff’s efforts to access portions of the leased land occupied by the squatters were frustrated by a court order,” says Kiscol adding that it managed to have the order set aside on March 13 2018 before a petition by the squatters was dismissed in January this year.
The sugar miller argues that it was an express and implied term of the sublease between the plaintiff and the CS National Treasury that it would have full, unhindered and peaceful possession of the land.
Kiscol says that at the inception of the project and granting of the sublease, it had made known to the government that the greenfield project was modelled and designed around availability of land and unhindered access to it.
It also argues that in breach of the legitimate expectation created by the defendants, it has not been able to access the entire leased area and has accessed approximately 50 per cent of the leased land.
The case will be mentioned on January 23 for pre-trial.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.