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Rai firms tighten grip on local sugar industry

By Dominic Omondi | Published Sat, October 20th 2018 at 00:00, Updated October 19th 2018 at 18:35 GMT +3

Contraband sugar found hidden in warehouses in Eastleigh, Ruiru and Nairobi’s Industrial Area is withheld at CID headquarters on Wednesday, June 13, 2018.According to Interior CS Fred Matiangi, chemical analysis on some of the 1,030 sacks of the seized sweetener also revealed copper contamination. [David Njaaga, Standard]

Billionaire Jaswant Rai now controls the largest share of Kenya’s sugar output even as once powerful miller Mumias Sugar was left holding on to a tea-spoon size of the market.

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A new report by the Sugar Directorate has shown that Mr Rai, through his three sugar millers - West Kenya, Sukari Industries and Olepito Sugar Company - now controls over a third of the sugar produced locally.

Processing of imported sugar helped Rai’s millers increase their output in the first nine months of 2018, with South Nyanza-based Sukari raising its production by 120 per cent to 44,067 tonnes from 19,420 tonnes in the same period in 2017.

West Kenya increased its production by 47 per cent to Sh78,740 tonnes compared to 53,770 in the same period in 2017.

Olepito, Rai’s new baby with operations in Busia County, managed 3,858 tonnes of the sweetener, not far from Mumias Sugar’s 4,768 between January and September 2018.  

Mumias Sugar, which once produced more than half of Kenya’s sugar, had a share of 1.3 per cent during this period, a steep drop compared to its performance less than five years ago when it produced 47,320 tonnes in the year to June 2013.

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“The production of one the powerhouses of Kenyan sugar industry, Mumias Sugar Factory, in the past has always merited attention. However, the dramatic downturn in Mumias sugarcane production in 2018 season has led to a very low sugar production of merely 4,768 tonnes in the period under review,” read the report.

The cash-strapped miller has been in the red for the last couple of years.

The report on the sugar market found that in the period under review, the quantity of sugar produced by all factories, except for Muhoroni Sugar Company, increased compared to last year.

But it was Rai’s three firms that played a key role in the improved performance.  

“The production was further boosted by operationalisation of Olepito Sugar Company and inclusion of processed bulk sugar imports at West Kenya and Sukari Mills,” said the Sugar Directorate.

Rai is said to have imported 180,000 tonnes of sugar after Treasury allowed duty-free entry in 2017. His explanation, as the storm raged on the quality of imported sugar, was that his firm invested in equipment to refine the bulk sugar it imported, making it safe for human consumption.

In 2017, expenditure on sugar imports was estimated at Sh61.5 billion. Official figures show that the quantity of sugar imports tripled from 377,300 tonnes in 2016 to 1,119,600 tonnes in 2017, mainly due to reduced production of sugarcane.

Local production recovered from a drought in 2017 with 362,018 tonnes of sugar produced between January and September this year, 43 per cent more than last year.

 


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