MPs push State to fast-track privatisation of sugar millers

By JAMES ANYANZWA

NAIROBI, KENYA: The Government should refrain from sinking public funds into troubled sugar millers, a House committee has said. Most State millers are in danger of imminent collapse.

Parliament’s Committee on Agriculture, Livestock and Cooperatives also recommended that government pulls out of the sugar industry and instead transfer the business to the private investors.

These views are expected to form part of the far-reaching recommendations meant to restore sanity in the sugar industry whose survival is hanging by the thread.

 The 29-member committee headed by Mandera North MP Adan Mohamed Noor said there was little justification for the Government to continue pumping taxpayers funds into inefficient and uncompetitive sugar millers.

Inefficiency has been blamed for the skyrocketing retail sugar prices in the country. “Some of these factories are insolvent while others are in receivership. There is no reason whatsoever why the government should continue pumping resources in these millers,” Noor told The Standard yesterday. “There is no business sense pumping money in factories that cannot compete. One thing is to liberalise the sector and the Government to get out of the sugar business.”

He said local millers are ill equipped to compete with cheap sugar imports from the Comesa trading bloc once the safeguard measures expires in February next year. The local industry is in turmoil due to irregular licensing of sugar millers, smuggling of cheap sugar imports and rampant cane theft that has hit the Western Kenya sugar-growing belt.

With only three months to the expiry of the Comesa safeguard measures, concerns are rising over the fate of the struggling millers, farmers and millions of households who directly and indirectly earn their livelihoods from the sugar sub-sector.

The companies lined-up for auction include Chemilil, Muhoroni, Miwani, Nzoia and Sony Sugar. The 19-member Comesa bloc recommended that the five millers be unbundled and treated as separate and individual operating facilities and each be sold on its own merit.

Kenya’s sugar production cost has remained high compared with its counterparts in the Comesa trading bloc. According to new findings,  the cost of producing one tonne of sugar in Kenya stands at $646 (Sh55,556).

Zimbabwe’s cost of sugar producing a tonne is $300 (Sh25,800), Malawi ($310, Sh26,660), Swaziland ($320, Sh27,520), and Sudan $340.