Land tussle with KAA set to derail Uchumi revival

Uchumi chief executive officer Julius Kipng’etich. PHOTO | FILE 

By MUGAMBI MUTEGI and KIARIE NJOROGE

In Summary

• Uchumi said it has a 99-year lease on the land running from May 1995 and included it as one of its assets in the 2014 rights issue information memorandum, adding that all land rates and rent for the property had been paid in full.
• The disagreement has revived a protracted ownership battle, which began in May 1995 when a company called Fendi Investments bought the land from the government in unclear circumstances and sold it to Uchumi in October 1996.
• “Uchumi cannot make an investment of this nature without following the law,” said Mr Thairu, adding that the retailer, which is under 24-hour protection, posed a less serious security threat than the open grounds at Uhuru Gardens.

Retail chain Uchumi’s recovery plan Thursday ran into strong headwinds after a government agency, the Kenya Airports Authority (KAA), claimed it owns the land on which the supermarket’s Lang’ata Hyper stands.

Uchumi announced in September that it was placing the mega shop on sale as part of the effort to raise money it needs to finance its flagging operations but the KAA said in a notice that the land, which is located at Nairobi’s Wilson Airport, belongs to it and cannot be sold without its involvement.

Uchumi dismissed the KAA’s claim as lacking a legal basis, insisting that it holds the relevant titles for the land.  “Uchumi Supermarkets Limited holds a valid title to the parcel of land in question,” said Julius Kipng’etich, Uchumi’s chief executive officer, adding that the retail chain has in the past transacted using that title without any objections. “We have official confirmation from the National Land Commission as to the validity of the title.”

People familiar with the matter said Uchumi had used to the title for the land, which measures about 3.7 acres, to secure a Sh300 million loan from Industrial and Commercial Development Corporation (ICDC) in September 2013.

ICDC, which owns a minority stake in the retail chain, was to receive quarterly repayments for the loan at an interest of 16 per cent over three years without a moratorium period.

The KAA had in 2004 attempted to have the shop demolished as it sought to recover some 2,500 acres of airport land it claimed was illegally allocated to third parties across the country.
The agency further claims that the supermarket sits on Wilson Airport’s flight path, posing a security risk.

“It has come to the attention of KAA, the proprietors of the (land), that a company namely Uchumi Supermarkets, who purports to own the land is trying to sell, lease or deal in one way or another with the land,” Yatich Kangugo, KAA’s acting managing director, said in a notice, warning that any person involved in the deal without its involvement would do so at their own peril.

Uchumi said it has a 99-year lease on the land running from May 1995 and included it as one of its assets in the 2014 rights issue information memorandum, adding that all land rates and rent for the property had been paid in full.

The KAA’s renewed fight for the land signals that it will take long, if at all, for Uchumi to conclude a sale agreement it had reached with private investors as part of the efforts to raise money for its recovery programme.

Unclear circumstances

The disagreement has revived a protracted ownership battle, which began in May 1995 when a company called Fendi Investments bought the land from the government in unclear circumstances and sold it to Uchumi in October 1996.

Three years later, in November 1999, Uchumi wrote to the KAA informing them of plans to build a supermarket on the plot which is located between Uhuru Gardens and Wilson Airport.

The KAA rejected the request, saying that land plan documents at the registry showed it was the property of the authority and that the sale was irregular and void.
The KAA said the plot was on a flight path (hence would pose a security risk if developed) and that it was part of the 2,500 acres of airport land that had been grabbed across the country.

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Kennedy Thairu, the then Uchumi managing director, in August 2000 wrote to the Directorate of Civil Aviation (now Kenya Civil Aviation Authority) asking for its intervention on the matter but this request fell on deaf ears.