By Prudence Minayo
Sugar is one of the most essential commodities in millions of homes in Kenya, thus making sugar milling a lucrative venture. Previously, Mumias Sugar Company was Kenya’s largest producer of sugar, occupying more than 60% of the market at its peak. However, its decline and subsequent collapse opened the doors for other millers to break even in this market. One such company is the Rai Group which operates at least 4 millers in Kenya and Uganda.
The Rai’s rank among the wealthiest families in Kenya. Rai Group is one of the largest sugar millers in Kenya through Olepito West Kenya Sugar (which produces Kabras)and Sukari Industries in Homa Bay. The company also produced edible oils, fats, soaps- Menengai, cement-Rai cement, and is into real estate, horticulture, Sawmilling- Timsales and RaiPly and wheat farming.
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According to Business Daily, the company produces approximately half the sugar consumed in Kenya. They opened their fourth sugar milling in Bungoma called Naitiri Sugar Company in 2022. The $44 million plant started operations in May and has the capacity to produce 6,000 tonnes of sugar per day.
Sugar Directorate Data in 2020 indicated that Rai Group controlled 45% of the total sugar sales in the country. West Kenya came in at 29 per cent, Sukari Industries at 11 per cent, and Olepito at 2%.
The former Chairman of Kenya Sugar board sees no problem with them expanding their sugar milling as long as they promptly pay farmers.
“The question that we should be asking is whether the company is paying farmers promptly after harvesting and if they issue permits for cutting cane on time. If they meet all that, then the question of dominance should not arise,” said Mr. Busolo.
The chairman of this conglomerate is Jaswant Rai who heads the business alongside some members of the family.
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The patriarch of the family, Tarlochan Singh Rai passed away in 2010 and years later his wife, the late Sarjij Kaur Rai joined forces with her sons, Jasbir and Iqbal to contest his will. The will left his wealth distributed among eight beneficiaries with Jaswant acting as executor. They claimed he was coerced into making the will
Following an alleged fallout, one of the sons, Sarbi Singh Rai, left the Rai Group to form his own company. Jaswant Rai and Sarbi were thrust into the limelight in January 2022 owing to their fight over the leasing of Mumias Sugar Company. Sarbi’s Uganda based company, Sarrai Group, had been awarded a 20-year year lease. This was challenged by Jaswant who wanted an explanation why his brother, the lowest bidder at Sh6 billion had been awarded the lease yet his bid was of Sh36 billion. A total of 8 bids had been surrendered.
Through his lawyer, Jaswant Rai said the lease was given based on other factors and not the interests of the creditors and company shareholders.
KCB receiver’s manager, Ponangipalli Rao said the tender couldn’t be awarded to Rai Group since that will make the company responsible for 42% of the sugarcane crushed in the country daily. This would give them a dominant position in the industry according to a 2010 Competition Act.
“If the Rai Group, which owns West Kenya Sugar Company Limited, is awarded the lease of the assets of the company, then the Rai Group of Companies will control at least 41.95 percent of the total sugarcane crushing capacity per day in Kenya,” said Mr Rao in court filings.