Cash crunch cripples sugar firm Mumias

Operations at Mumias Sugar Company have ground to a halt following a cash crunch and cane scarcity.

The sugar milling firm is grappling with up to Sh18.6 billion debt owed to banks, Kenya Revenue Authority (KRA), employees and sugarcane farmers.

Milling was suspended a week ago to pave way for accumulation of adequate sugarcane.

The firm’s Chief Executive Officer Nashon Aseka said the miller owed both local and international banks about Sh12 billion, KRA Sh4 billion and the employees Sh2 billion.

Cane deliveries

Another Sh600 million is owed to farmers for cane deliveries. Most of the debts date back to 2016.

“Our operations have been hurt by scarcity of sugarcane,” said the chief executive officer.

According to Mr Aseka, most farmers with mature cane are demanding to be paid the arrears first before they can supply more cane to the firm.

“It is a big problem because we do not have instant cash, but we are doing all we can to keep afloat by talking to the growers and making little payments whenever possible,” he said.

He said the company owed newly recruited sugarcane growers up to Sh50 million.

Despite the challenges, Aseka is optimistic the company will overcome the financial turbulence.

“We are looking at many ways of raising money including scouting for investors or going for cheap loans, we have not given up on state funding as the Government remains one of our key shareholders,” he said.

Signed deal

He said the management had signed a deal with the county government to expand sugarcane farming

The Kenya Union of Sugar Plantation and Allied Workers has called on an audit of Sh3.6 billion pumped into the company by the Government.

The union also wants culprits implicated in misuse of the allocation to be held accountable and forced to return the cash.

Union Secretary General Francis Wangara said the Government should shop for an investor who will inject funds required to turn around the miller’s fortunes.

“The investor should be able to plough at least Sh6 billion into the ailing factory to bring it back to its feet, we cannot expect miracles from the current management,” said Mr Wangara.

He claimed staff at the company had gone without pay for eight months, claims that were refuted by the chief executive. Aseka said the workers had not been paid for the month of February alone.

“In fact, we have been able to pay some advance salaries to them save for the arrears which the company is making arrangements to clear,” said Aseka.

The CEO said salary arrears started to accumulate long before he took over from his predecessor, Errol Johnson.

“We started clearing salary arrears when I took over in June last year and so far, the management has been able to sustain that momentum,” he said.

Not insolvent

Aseka said the company was not insolvent and that all the debts would be cleared immediately the issue of cane shortage was addressed.

“The company would have gone into receivership in 2014 after it plunged deeper into financial crisis, but there is hope since the State has prevailed upon KRA and the banks to give us ample time to recover and clear the debts,” said Aseka.

He said the company was too big a venture to be wished away.