Ray of hope as government invites investors to bid for troubled millers
By Harold Odhiambo
| Jul 11th 2020 | 3 min read
Five State-owned sugar factories in Western Kenya sugar belt are set to be privatised.
Already, the government has invited investors to bid for Chemelil, Muhoroni, Miwani, Nzoia and Sony Sugar factories.
The planned privatisation had been proposed by experts who said it was the best way to save the millers from collapse after government’s numerous unsuccessful attempts to breathe life into them.
The millers have been struggling to crush cane in the past few years, leading to losses. Matters have been made worse by the sharp division between leaders and residents over plans to privatise the millers.
In the last 10 years, the government has tried in vain to revamp the millers by pumping in billions of shillings while also writing off some of their debts.
Privatisation is expected to transform the millers as the government seeks to prepare the troubled sugar sector to compete regionally.
The government also hopes privatisation will help the country meet its consumption rate of about one million tonnes of sugar per year and get a surplus for export.
Yesterday, the Agriculture and Food Authority tasked with leasing out the factories said that the investors the government is seeking should be able redevelop and operate the millers at sufficient capacities.
The authority said they were looking to engage investors with “world class experience” to redevelop the factories into larger sugar complexes and manage them over a lease period of 25 years.
The development is expected to help the region improve its economic status and bring to an end controversies that have dogged its sugar sector.
From protests by farmers and workers to lack of enough cane as well as cane poaching, operations at the factories have been a mess.
Yesterday, however, farmers expressed optimism that the move by the government would bring sanity to the sugar industry.
Richard Ogendo, the secretary general of Kenya National Alliance of Sugarcane Farmers Organisations, said they believe privatisation would transform the factories.
“We fully support the leasing of the factories. The factories have been struggling to keep their operations,” Ogendo says.
Ogendo, however, said the authority should provide clear guidelines on how they intend to offset the debts the companies owe farmers as well as the arrears owed to workers.
The companies that have been earmarked for leasing have been struggling to sustain their operations. Chemelil, for instance, last made a profit in 2001 while Muhoroni has been barely crushing 20 per cent of its capacity.
Officials at the factories claimed that crushing machines are rarely maintained, making the factories to spend more in producing a single tone of sugar.
This means that the potential investors will have to invest heavily on the factories to keep them running.
In the Nyando sugar belt where three public factories lie, farmers have been sharply divided over the plans to privatise the millers. The bone of contention has been the land issue, which they claim is owned by the community.
And with the developments, sugarcane farmers have proposed the formation of community trustee organisations to manage nuclear estates for millers.
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