Senate queries government's plan to sell majority stake in sugar millers
The decision by the Government to sell a majority stake in sugar factories to strategic investors has been questioned by a Senate committee.
The Departmental Committee on Trade said a majority stake in the hands of private players could give new owners immense powers to use millers’ land and other assets for personal gain.
The Privatisation Commission (PU) wants a sale of 51 per cent stake in the five millers to a strategic investor.
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The State will be left with a 25 per cent stake while the 24 per cent shareholding will be sold to farmers and staff. “A 51 per cent stake in the millers will give the investors power to call all the shorts. We might end up with a situation where they might use the land or assets as collateral in borrowing money from a financial institution and walk away without making investments,” said Charles Kibiru, the Senate Committee on Tourism, Trade, and Industrialisation chairman. “They may end up having the lenders auction the land or assets,” he added.
The State wants to sell Sony, Chemelil, Nzoia, Muhoroni and Miwani sugar companies in a plan that got approvals in 2009 but was dogged by delays. They cited instances where investors bought State-owned entities and used the assets for other purposes, citing the PanPaper Mills in Webuye, where the investor has failed to make progress. PU said it would put in place mechanisms to guard against such in sale contracts
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