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A British company, millers line up to buy struggling sugar firms

BUSINESS
By Paul Wafula | April 14th 2016
By Paul Wafula | April 14th 2016
BUSINESS

A British company is among a host of companies that have placed bids to buy five sugar companies that have been put up for sale.

Sources revealed that there are several sugar companies from the East African region that have also expressed interest.

The source said the British company has had its agents in the country for years, some of whom were part of the expatriate team that ran Mumias Sugar Outgrowers Company (MOCO) in the early 2000s.

The names of these companies were expected to be announced sometime this week after the bids were opened. But this has now been postponed for at least two months after the High Court stopped the process.

The Privatisation Commission, which is spearheading the sale, had put up the five millers - Nzoia Sugar, South Nyanza Sugar Company, Chemelil Sugar, Muhoroni and Miwani Sugar Company - as part of the Government’s efforts to reduce its involvement in the sugar industry.

The bidders or a consortium leader are required to demonstrate that they have operated in the sugar industry for at least 10 years.

This is likely to lock out several investors but is seen as a step to allow current players, including farmers and organisations in the sector, first priority.

Privatisation Commission boss Solomon Kitungu said that bidders or a consortium leader must be able to demonstrate their experience in operating sugar companies with a milling capacity of at least 3,500 tonnes of cane crushed per day (TCD).

Those interested to buy must also have deep enough pockets to buy a 51 per cent stake in any of the targeted millers as well as have the capacity to mobilise additional resources to pump into the rehabilitation and expansion programme.

The process, which started in 2008, has been rocked by one setback after another and this becomes the strongest step yet to sell them off.

The Transition Authority, which stopped the sale this week until a case it filed is heard and determined, has accused the Privatisation Commission of going ahead with the process without its approval.

The commission had expected to finish the process in seven to nine months but this may now push the process into 2017, an election year, which will further complicate the process due to politics.

Most of the sugar companies on sale are suffering from mismanagement and obsolete technology that has made production of sugar in the country uncompetitive. This has seen the market flooded with cheaper imports.

The Cabinet approved the process in October, 2010. 

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