Hope as Government moves to lift Muhoroni out of Sh40b debt hole

Sugarcane farmers demonstrating outside Muhoroni Sugar company following the closure of the factory. The sugar company was closed indefinitely and repossessed by Kenya revenue Authority affecting over 10, 000 workers. [Collins Oduor/Standard]
The troubled Muhoroni Sugar Company could be out of the woods in the coming weeks after the Government appointed new receiver managers and pledged to bail it out of a Sh40 billion debt.

The Standard has established that the Government plans to help the miller, which has been in receivership for 17 years, back into production. Already, the State Department of Agriculture has gazetted and dispatched to the miller two new joint receiver managers to help turn around its fortunes.

The receiver managers, Hating Kirui and Elisha Ooko, reported to work last week and were met by Government-hired operation strategists in a meeting geared at reopening the factory.

New path

They also met sugarcane farmers and factory workers to chart a new path with stakeholders, who are owed hundreds of millions by the company.

And for the first time in nearly 20 years, the Government has pledged a bailout to help get the miller back to operation. Muhoroni MP James K’Oyoo confirmed that the Government had pledged to clear farmers' debts and workers' salary arrears totaling Sh570 million.

The State will further pump millions towards maintenance of worn-out factory equipment.

According to the outgoing receiver managers Asa Okoth and Fredrick Kebeney, Sh500 million worth of overhaul was needed to optimise the plant.

Huge debt

A series of interventions, including negotiations between the Sugar Directorate and the taxman over recovery of a Sh1 billion debt and a meeting between governors from the sugar-growing zones and Agriculture CS Mwangi Kiunjuri seem to have saved the struggling miller.

A week ago, governors from sugar-growing zones met the Agriculture CS to chart a revival path for the ailing sugar industry.

The two-day meeting between the county bosses on one side and the Privatisation Commission and Government officials was the culmination of intense lobbying by sector workers and sugarcane farmers’ representatives alarmed by the ailing state of public-owned millers.

The meeting sought to explore short- and long-term solutions to the industry's problems. A nine-point resolution arrived at in the meeting will be presented to President Uhuru Kenyatta this week in yet another meeting involving governors. Although Muhoroni is in protected receivership, it is only shielded from trade debts. The taxman has been raiding the firm’s accounts to recover tax cash accumulated since the firm was put under receivership in 2001.

The former receiver managers said the firm was facing acute cane shortage and would soon close down if KRA did not stop collecting its debts once operations resume. They were, however, optimistic that once it becomes efficient, the miller would be able to service its debts.

Although the firm has contracted more than 16,000 farmers, cane poaching by private millers that have not invested in cane development has left it with little stocks to crush. “The situation is so bad that they (private millers) don’t even wait for the cane to mature,” said Mr Okoth.

Muhoroni Sugar CompanySh40 billion debtmuhoroni receiver managerssugar industry