Success of private sugar mills in Kenya put pressure on struggling public firms

Ms Joyce Opondo, the Communication Manager, Kibos Sugar Company during the interview at her office in Kisumu. PHOTO KEVIN OGUTU/STANDARD

KISUMU: There is an increased pressure from the public-owned sugar companies to register profit as their privately-owned counterpart.

Kibos Sugar Company, one of the four privately-owned sugar millers, has built a multi-billion refinery with a capacity to produce 500 metric tonnes of industrial sugar per day against the country’s current demand of 260 metric tonnes per day.

The refinery, which will be the first in Kenya and the East Africa Community, is expected to meet the entire local demand, meaning that Kenya will no longer import industrial sugar.

Currently, Kenya imports 100 per cent of industrial sugar that is used in various industries, a trend that will stop in the next three months when the Kibos-based refinery is expected to start operations.

According to Ms Joyce Opondo, Kibos Sugar Company Communication Manager, the industrial sugar from the refinery will be cheaper than the imported ones because of the stat- of-the-art technology that the company is using.

The refinery will produce white sugar for supply to beverages and confectionery industries, besides targeting the pharmaceutical as key ingredient to drug manufacturing.

According to Opondo, this venture will save the country foreign exchange and boost reserves.

“It will also provide the much needed sugar for industrial use, which prior then is not manufactured in Kenya and across East African Community,” she said.

The refinery, therefore, expects to supply the local market and have a surplus for export to the EAC and Comesa markets, thereby earning the country the much needed foreign exchange.

This recent development from a privately-owned sugar factory is already sending fear down the spines of public millers, which are stuck in debt and outdated machines that are far much less efficient.

More than 1,000 farmers from the Awendo Sugar Belt were awarded over Sh100 million by the court after winning a case against the South Nyanza Sugar Company over breach of contracts. In an internal memorandum from Sony Sugar Company Secretary Gabriel Otiende to the Managing Director, Jane Pamela Adhiambo, dated 30, March 2016, the number of cases relating to breach of cane growing contract against the Company for the period 2004 to 2015 stood at 1192.

In May 2016, sugarcane farmers in Nandi and Kisumu counties asked the Government to save Chemelil Sugar Company from a possible collapse.

Some of the issues raised include delayed payments and failure by these public millers to register profit.

Agriculture Cabinet Secretary (CS) Willy Bett, in an interview with The Standard, said that privatization of state-owned sugarcane companies was the only remedy to reverse their misfortunes.

“What Kenya’s sugar industry needs is a serious private developer who will come in with the right technology that would make the operations profitable,” said Bett.