State to write off Mumias Sugar debts, recruit new investor — Ruto
Another effort to steer ailing Mumias Sugar back to life is in the offing with President William Ruto offering to clear billions of debt owed by the company as well as by other millers.
“The government will pay all the debt for sugar factories. I will bring a new investor for Mumias and oversee the revival. The current issues at Mumias cannot be allowed to continue,” said the President.
At the moment, the once giant company owes Proparco—a Development Finance Institution partly owned by the French Development Agency and private shareholders from developed countries and developing nations—an estimated Kes1.84 billion in a loan that was secured using the firm’s electricity generation plant.
PanAfrican lender Ecobank owes the Kakamega-based miller Kes1.77 billion, a credit facility that was guaranteed on the ethanol plant. Further, KCB, NCBA, and Stanbic Bak are owed over Kes3 billion while the Treasury owes the firm Kes2.83 billion.
While on his maiden tour of Kakamega County as President, Dr Ruto heaped the blame on current Mumias Sugar management for what he termed as its failure to turn around the factory despite receiving massive support from both the national and county governments.
“The government will clear all outstanding debts of the miller and bring in a new investor under an agreement that he will be remitting Kes100 million monthly to the County Government of Kakamega to improve standards of education, health and roads,” the President said.
Read also: Sugar barons dancing on Mumias graveyard
The latest move spells doom to Sarai Group—a privately owned conglomerate in East Africa and Southern Africa that is based in Kampala—which has been working to turn the factory to profitability while at the same time fighting endless court battles.
In December last year, Sarrai Group won a 20-year lease, only to spark suits and counter suits challenging it from running the company.
Early this year, however, the High Court ordered Sarrai to leave the premises. The judge also dropped Ponangipali Venkata Ramana Rao as the Administrator of the miller.
Dr Ruto faulted the current management saying that it is not benefiting the locals who donated over 15,000 acres of land nor the county government.
“I will meet with leaders from this region to come up with a lasting solution,” he explained.
Early this week, Mumias Sugar products hit the shelves after nearly 10-year absence putting the firm in a rather precarious position of fighting for space in a market that it once dominated.
The company has the capacity to process 8,000 tonnes of sugarcane per day and runs a nucleus cane farm of roughly 4,000 hectares.
Currently, West Kenya, the producers Kabras Sugar remain a major player in the sugar market accounting for at least 144,000 tonnes of the 652,376 tonnes sold in the 10 months to October this year.
The latest disclosures from the Sugar Directorate show that the four milling firms owned by the billionaire Rai family accounted for 45 percent of the total sugar sales in the 10 months to October, up from 42 percent in the corresponding period last year. The Rai family owns West Kenya, Naitiri, Olepito and Sukari Industries.
