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Chemelil and Muhoroni Sugar factories appeal for bailout amid huge debts

BUSINESS
By Harold Odhiambo | August 12th 2019

Struggling Chemelil and Muhoroni Sugar factories need about Sh338 million bailout to resume operations as they continue to grapple with huge debts and unpaid staff salaries.

Managers in the two companies painted a gloomy picture on the fate of the troubled millers even as they called on the Government to speed up the privatisation process.

Local leaders, included area MP James Koyoo, and employees at the respective millers, want the Government to ensure the two are operational before they can be privatised.

Chemelil, which is the hardest hit, stopped milling five months ago and is yet to pay Sh844 million staff salary arrears for 17 months.

While some of the farmers who have been supplying the miller with cane have been paid their dues, workers have been on the receiving end of the financial crunch.

On Friday, a visit by the Labour and Welfare Committee of the National Assembly exposed the rot in the two companies, with the management of the companies absolving themselves from blame.

Chemelil, which last made a profit in 2001, is hoping that the Government will intervene and bail it out with Sh258 million.

According to Managing Director Gabriel Nyangweso, the company’s equipment needs maintenance to improve efficiency.

The company has never had proper maintenance for six years, which the management said had contributed to the increase in the cost of production.

“Our machines are not efficient. We use 16 tonnes of sugar cane to produce 1 tonne of sugar while about 10 tonnes of cane should be the one used to produce the one tonne of sugar,” said Nyangweso.

Nyangweso said they had to stop operations in March after accumulating losses and failing to get adequate cane to sustain their production.

“We have been spending about Sh106,396 to produce one tone of sugar, while selling at about Sh68,880 averagely since 2013,” said Nyangweso.

The situation is almost similar in Muhoroni, where the company has been crushing barely 20 per cent of its capacity and is yet to offset workers' salaries for several months.

Already, the management of the company has submitted a request of Sh559 million to the Government for maintenance of the company’s rusty equipment.

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