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.
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