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09 March, 2011

The Butali sugar Fiasco

The legal debacle facing this company is far from over following the latest court injunction halting its operations weeks after it was opened by the prime minister .

The legal tussle pits Butali Sugar Company against West Kenya Sugar Company.The bone of contention is , Butali sugar company breached the sugar act by constructing the company without following guidelines on catchment area limits .West Kenya Sugar Factory, owned by the Rai family, is only 16 kilometres from Butali but according to the Sugar Act, factories should be no closer than 24 kilometres to ensure they get enough cane.

The West Kenya factory was originally owned by the Patel family but in 2004 Jayanti Patel left the business after his nephew Sunil became the chief executive. He then applied for a licence to establish a sugar company in Kakamega. West Kenya objected but eventually the licence was issued and it became Butali.

For the past seven years, there has been a constant tug of war as government repeatedly rescinded and reinstated the Butali licence.

In October the High Court issued an injunction blocking the Kenya Sugar Board (KSB) from issuing an operating licence to Butali. The order was to be in force until February 14 when the matter was to be heard inter-partes.

West Kenya Sugar Company filed an urgent application on February 12 in arguing that the Attorney General and the Kenya Sugar Board disregarded the court order and issued Butali with a licence to operate.The court therefore , reinstated the order issued in October last year until the petition by West Kenya Sugar Company is heard and determined.

The deputy prime minister,Hon.Musalia Mudavadi, hinted at behind the scenes negotiations to see a way in helping Butali commence operations soonest possible.

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