Sugar millers up for grabs as Kenya fixes privatisation date

Agriculture Principal Secretary Sicily Kariuki. [PHOTO: FILE]

NAIROBI: Kenya plans to sell a 51 per cent stake in five sugar millers to strategic investors starting this month as it looks to complete reforms aimed at making its sugar industry competitive, a top official said on Friday.

East Africa’s largest economy is expected to fully open up its market to imports from the regional Common Market for Eastern and Southern Africa (Comesa) states after more than a decade of an arrangement that allowed it to charge high tariffs to protect its sugar farmers.

“In the best-case scenario, we want to begin the sale process of the five sugar firms by end of this month because time is not on our side. We must move with speed and finish the work,” Sicily Kariuki, principal secretary in the Agriculture ministry, told Reuters.

The East African nation was in February granted a one-year extension of safeguards that limit sugar imports from Comesa to allow the country improve the competitiveness of its sugar industry.

The tariffs were scheduled to fall to zero in March, but Kenya sought an extension until 2015 to conclude reforms in its sugar industry.

“From the deadline of the extension of the Comesa import safeguards we realise we have no option but to move fast because we have a lot to do,” Kariuki said.

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The Government will sell a 51 per cent stake in the five sugar companies to strategic investors and reserve another 30 per cent for farmers, she said.

The Government will then sell a remaining 19 per cent stake in the Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies in an initial public offering once the factories are profitable.

AGEING MACHINERY

Critics have blamed a high cost of production for the woes facing Kenya’s sugar industry. Poorly funded Government factories have ageing machinery that is prone to break down. The roads in most sugar growing areas are also in poor shape.

The industry regulator, Kenya Sugar Board, estimates the cost of producing a tonne of sugar at about $570 in western Kenya compared with $240-$290 in rival producers such as Egypt.                

 —Reuters