Report: Chemelil Sugar Company on deathbed

Chemelil Sugar Company faces closure if the Government does not inject funds to the milling factory, Auditor General Edward Ouko has warned.

In a report tabled in the National Assembly on Wednesday, the Auditor has cautioned that the miller in Kisumu County is on its deathbed, and its continued operations will depend on financial intervention from the national government.

According to the 2015/16 Financial Year report, the company has for the last two fiscal years accumulated losses of Sh4.81 billion, with the liabilities exceeding the current assets by Sh1.74 billion.

"During the year, the company's performance continued to deteriorate as it incurred a loss of Sh767.25 million. The loss in 2014/15 financial year was 640 million. This brought its accumulated losses to Sh4.81 billion," the report says.

"Evidently the company is technically insolvent and its continued operations as a going concern are, therefore, dependent on financial support from the government, trade payables and its bankers," adds the report.

At the same time, Mr Ouko questioned why action has not been taken on anyone, after it was established that the company in 2008, irregularly sold 118,144 units of 50kgs of sugar valued at Sh256.4 million to three companies ostensibly for export to South Sudan.

"The sugar was not exported but sold in the local market. It was not, however, explained how sugar meant for export ended up in the local market. Though the issue was handed over to Ethics and Anti-Corruption Commission, the matter hasn't been concluded to date."

Last Friday, Agriculture Principal Secretary Richard Lesiyampe sent the sugar factory Managing Director Charles Owelle and his top managers on compulsory leave, following a week-long strike by workers and cane farmers.

He made the announcement after a five-hour meeting with stakeholders at the company premises in Muhoroni, Kisumu County.

Mr Owelle, Head of Human Resources Jecinta Kipkering and Head of Procurement Robert Nyakundi were suspended for two months to facilitate investigations over claims of poor management.