'Mumias Sh1 billion bailout offer political trick'

Deputy President William Ruto with Hon. Ababu Namwamba when leaders from Western Kenya paid the President a courtesy call at State House, Nairobi. Photo:PSCU

President Uhuru Kenyatta will tour Western Kenya today just 24 hours after announcing the release of bailout funds for Mumias Sugar Company by the National Treasury.

Despite claims by State House that the bailout is not political, many CORD leaders see today's visit to Mumias by the Head of State as an attempt to reduce the influence of former premier Raila Odinga in a region that overwhelmingly voted for the Opposition in 2013.

"We are keen on reviving the sugar company because we know it will benefit farmers. We strongly believe that it will support the economy of Western region. This has nothing to do with politics," President Kenyatta had said. The tour also comes in the wake of Monday's State House visit by a section of Luhya leaders, during which the President announced the bailout.

The President and his deputy William Ruto will symbolically present the money to the management of the sugar miller today. However, Kakamega and Bungoma senators say the Government should write off Mumias' Sh10 billion debt the way it did for the coffee industry and national carrier, Kenya Airways.

Senate Minority Leader Moses Wetang'ula (Bungoma) accused President Kenyatta and his deputy Ruto of cashing in on the sugar firm's woes to advance Jubilee's political agenda, insisting that company will still have to repay the money.

"Part of the money being given to Mumias is from the Sugar Development Levy, which is a loan to the miller. The balance will come from Treasury and will be accounted for by scaling up national government shares. There is therefore no free money being given to Mumias by the President," he said.

He continued: "Ruto talked of Sh5 billion. Where is the other Sh4 billion? The Government would do better to write off all Mumias debts the way they did with Kenya Airways."

But the President's spokesman Manoah Esipisu dismissed the two senators, adding that the Government is also planning to spend another Sh2 billion in the miller's Rights Issue.

"We want a viable company that will be able to sustain itself for a long time to come," said Manoah, who confirmed the President's Mumias visit. Kakamega Senator Boni Khalwale, also dismissed the bailout as a drop in the ocean, but the legislators who were at State House on Monday, including ODM Secretary General Ababu Namwamba (Budalangi), welcomed it.

"We shall receive Sh1 billion Government bailout with both hands, but in the full knowledge of the fact that Mumias is indebted to the tune of over Sh5 billion. Sh1billion is just a drop in the ocean," said Dr Khalwale.

Wetang'ula also asked why the Government gave Kenya Airways Sh4.2 billion yet the national carrier is yet to release its full year financial results. The airline issued a profit warning in November last year it is expected to make a loss of at least Sh4.3 billion.

"By giving Mumias a paltry Sh1 billion, the Jubilee Government is not doing the people of Western any favour. Government has written off debts of other organisations without the fanfare we are seeing," said Wetang'ula.

Kakamega Governor Wycliffe Oparanya said the company is in need of more funds to pay farmers and other creditors and repeated his call that the Government transfers its 20 per cent shares in the sugar miller to the county.

But Namwamba defended the bailout saying: "Sh1 billion is part of the Government's bigger strategy to save the company. We all know it is not enough because the budget projection to fully save Mumias is Sh5 billion."

Ford Kenya Secretary General Eseli Simiyu said bailouts for institutions are budgeted for by Parliament, noting that the revival of Pan Paper should have been factored in the budget as well.

political bait

"How come bailouts for coffee or tea are expressly factored in the budget, but the one for sugar is used as political bait to entice Western leaders to the ruling coalition?" wondered Eseli. ODM MPs Opondo Kaluma (Homa Bay Town) and Opiyo Wandayi (Ugunja) also dismissed the bailout as a political gimmick.

"This is a knee-jerk reaction from a Government that has lost direction in driving the economy and governance. They have now resorted to dishing out money like biscuits. We need to have a comprehensive sustainable recovery plan," said Wandayi.

Kaluma said: "President Uhuru has no money of his own to bail out Mumias unless budgeted for by Parliament. Bailing out has happened to several institutions in which the public has interests and nobody can gain political mileage by pronouncing himself on public funds set aside for development by Parliament,"

Additional reporting by Rawlings Otieno