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Citizen Weekly

Tuesday, 24 March 2015

MUMIAS SUGAR IN TROUBLE OF KENYA POWER BILL

Kenya Power has moved to court seeking to freeze Mumias Sugar Company’s assets until the struggling miller settles a Sh1.1 billion electricity bill a demand that could worsen the miller’s dwindling fortunes.
The bill arose from Kenya Power supplementing Mumias’ power production plant between 2009 and 2014.
While the miller has only paid Sh70 million, the electricity distributor wants the court to compel Mumias to pay the total bill, a move that may disrupt a government rescue bid that involves a Sh1 billion cash injection and a Sh4 billion rights issue.
The case arose from a deal signed in 2009 that was to see Mumias sell excess power from its plant to Kenya Power. The miller was in turn to buy electricity from Kenya Power whenever its generators were on standby.
But the miller has refuted claims it owes the company money relating to “back-feed” energy consumption that had not been billed. Back-feeding occurs when electric power is introduced into a local power grid.
In its prayer, Kenya Power asks the court to grant “an order of injunction restraining Mumias from disposing, selling or in any way parting with custody of all moveable and immoveable properties in a way to defeat any judgment that may be entered against it.”
As an alternative to freezing the miller’s assets, Kenya Power wants it to deposit Sh1.1 billion with the court to secure its interests in the event the miller offloads its assets before the case is concluded.
Kenya Power’s case is the second court pursuit of Mumias by creditors barely two months after President Uhuru Kenyatta brokered the bailout deal.
The amount demanded by the electricity supplier may unsettle Mumias’ planned bailout as it may encourage other creditors to go after it for money owed.
In January, Security firm G4S filed a suit seeking Sh45 million in unpaid bills over three years, which the miller has conceded to owing in emails attached as evidence. G4S holds that Mumias had agreed to pay the amount urgently but is yet to offset the debt.
The security firm is demanding Sh40.7 million for guarding services in offices around the country and its factory, Sh4.6 million for response services it offered in times of emergency and Sh173,000 for courier services.
G4S has also asked the court to compel Mumias to settle the costs it will incur in the legal battle for its dues.
The President Kenyatta-brokered bailout will also see shareholders fork out Sh4 billion in a cash call aimed at resurrecting the miller’s profit-making days.
But the rescue plan also appears to have signalled creditors to come calling despite a request from the president to go easy on Mumias until it gets back on its feet.