High Court of Kenya clears Nzoia Sugar lease to Rai Group
West Kenya Sugar gets greenlight to invest KES 5.76 billion in Nzoia Sugar as Kenya rolls out sugar industry reforms.
KENYA – The High Court of Kenya has dismissed a petition challenging the leasing of Nzoia Sugar Company, paving the way for West Kenya Sugar Company—a subsidiary of the Rai Group—to proceed with its KES 5.76 billion (US$44.4M) investment in the government-owned miller.
In a virtual judgment delivered by Justice Lawrence N. Mugambi, the court upheld preliminary objections filed by the State and other respondents, ruling that the petition was res judicata, meaning it had already been adjudicated.
The court found that the key issues raised, including the alleged lack of public participation in the leasing process, were conclusively addressed in an earlier case, Martin Nyongesa Barasa v Cabinet Secretary, Ministry of Agriculture & Others (Petition No. E065 of 2024).
West Kenya Sugar secured the lease through Tender No. MOALD/SDA/IT/001/2024-2025 as part of a government initiative to revamp state-owned sugar factories. The company is set to modernize the Nzoia Sugar plant and increase production under private management.
Established in 1975, Nzoia Sugar Company is 98% government-owned, managing a 3,600-hectare nucleus estate and supporting 23,500 hectares of outgrower farmland.
Minority shareholders include Fives Cail (1.13%) and the Industrial Development Bank (0.93%), based on a 2021 audit by the Office of the Auditor-General.
In a related development, the government has disbursed KES 200 million (US$1.54M) toward outstanding sugar factory worker salaries, bringing the total payout to KES 800 million (US$6.2M).
Further support for the sugar sector was announced by Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe, who outlined a KES 4 billion (US$30.9M) annual investment plan to be financed through the Sugar Development Levy (SDL).
The initiative targets sustainable growth and revitalization of Kenya’s sugar industry.
According to the CS, 40% of the SDL will be directed toward national cane development programmes. An additional 15% (KES 600 million) will be used to rehabilitate roads in cane-growing regions to reduce post-harvest losses and enhance market access.
Another 15% will go toward research and innovation to support mechanization and development of improved crop varieties.
Factory rehabilitation is set to receive 15% of the SDL, while 5% will strengthen farmer associations.
The remaining 10% will support administrative functions under the restructured Sugar Board, completing a comprehensive strategy to modernize Kenya’s sugar sector.
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