Six sugar distributors sue State over Sh173.6m owed by leased mills
Six sugar distributors and other businesses have moved to the High Court seeking to recover Sh173.58 million they claim is owed by three State-owned sugar companies that were leased to private operators.
The petition, filed at the High Court in Nairobi in August 2026, challenges how the creditors’ claims were handled following the leasing of South Nyanza Sugar Company, Chemelil Sugar Company and Muhoroni Sugar Company.
The businesses want the court to declare that they have enforceable property interests in the leased assets and proceeds. They are also seeking compensation for the outstanding debt, loss of profits and interest.
The dispute comes more than a year after the High Court cleared the leasing programme and about 15 months after leases for the three sugar companies were signed.
The petitioners argue that financial obligations owed to them remained unsettled after the mills were transferred to private operators. They are now asking the court to determine who should be responsible for settling the outstanding claims.
The six petitioners are Lesphine Investments Limited, Patel Chimanlal trading as Umiya Wholesalers, Chebaibai Traders Limited, Mahendrabhai Jethabhai Patel trading as Kaval Enterprises, Procel Transport Limited and Axabd Investment Limited.
They are described in the petition as merchants, sugar distributors and, in the case of Procel Transport, a transport and logistics company that had commercial dealings with the affected sugar mills.
The combined claim of Sh173.58 million comprises Sh32.76 million allegedly owed by South Nyanza Sugar Company, Sh75.72 million by Chemelil Sugar Company and Sh65.10 million by Muhoroni Sugar Company.
The businesses say they had made payments to the sugar companies for supplies before the leases were executed.
Some of the transactions are described in the petition as “Forward Sales”, under which the businesses paid for sugar supplies in advance.
According to the petitioners, the transfer of the mills to new operators left them with outstanding claims despite having already paid for supplies.
The case now places the financial obligations arising from the previous operations of the three mills at the centre of the dispute, with the petitioners seeking to have their interests recognised and the money they claim recovered.