Sugar company pleads with KRA to go slow on Sh1b taxes

Chemelil Sugar Company Chairman Zedekiah Bundotich. [Collins Oduor, Standard]

Chemelil Sugar Company has opened talks with the Kenya Revenue Authority to suspend recovery of more than Sh1 billion it owes in taxes to allow it to resume profitable operations.

The newly appointed management board chaired by Zedekiah Bundotich said it was seeking a "friendly tax recovery formula" to enable the factory to stay afloat as it settles the huge debt.

The talks, Mr Bundotich said, were progressing well.

“We are both government agencies and the mandate of KRA is to make money, which they cannot do if firms like Chemelil are out of operation. So we are hopeful that we will strike a formula favourable to both parties.”

In an interview with The Standard just days after meeting farmers to convince them to continue supporting the miller, Bundotich said he was confident the board would convince the taxman to ease its raids on the company's accounts.

“One of the Government’s Big Four agenda items is manufacturing and it is firms like Chemelil that can help make this dream come true. But our biggest challenge is inefficiency, which can be resolved through maintenance of the mill," he said.

The board, which also includes David Osiany and former Kisumu governorship contestant Christine Atieno Otieno, is seeking a Sh500 million to put the loss-making miller back on its feet.

Political strings

“We are going to pull political strings to ensure that Chemelil gets a capital injection to finance replacement of worn out machinery so that we can crush optimally and meet our financial obligations,” Bundotich said.

Chemelil, which resumed operations in July after a five-month lull, crushes 16 tonnes of cane to produce a tonne of sugar.

“We are bleeding money every time the factory is running. And with sugar prices having plummeted to just over Sh4,000 when cane prices have remained at Sh4,000 per tonne, we are on the brink of loss-making. This is why the Government must step in and help us,” he said.

Chemelil is selling a 50kg bag of sugar at Sh4,100, down from Sh5,700 a month ago.

Bundotich said the firm would conduct a technical audit of the factory to establish what was needed to restore the miller, which was the country’s most efficient in the 2000s. That position is currently held by Kibos Sugar Company

President Uhuru Kenyatta appointed the board last month. Bundotich and his team came to an office at a time when farmers and factory workers were owed over Sh700 million in arrears and the company was struggling to get a market for its sugar due to a glut.

The board has also asked with the Government to step up the war against sugar importing cartels.