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How tax waiver triggered sugar war at Kenya's port

Multi-agency officers from Public Health, KEBS, KRA, DCI and Police officers inspecting suspected contraband Sugar at a warehouse belonging to Kanini Supermarket in Nakuru on June 19, 2018. [Kipsang Joseph/Standard]

The raging sugar wars in the country escalated yesterday, with a sugar company whose consignment is under probe defending its imports.

The seizure of West Kenya Sugar Company's consignment at Webuye’s Pan Paper in western Kenya has introduced a new angle to the saga.

Yesterday, West Kenya Sugar Company, whose consignment is among others under probe, said its imports were cleared by Government agencies.

The firm said the bulk brown sugar it imported was placed in quality-controlled, white woven bags that had an inner water-resistant liner.

Further processing

“The bags are marked ‘Not for Sale' because the sugar requires further processing to our exacting standards before it is released to the consumer market. As we imported bulk brown sugar it was a condition by (the Kenya Bureau of Standard (Kebs) that the same should be further processed at the factory in Kakamega,” said West Kenya’s Managing Director Tejveer Rai in a statement.

Mr Rai said to ensure this condition was met, the sugar was transported 900km by road from Mombasa to Kakamega.

“The final product is then tested in our laboratories to ensure that it meets the Kebs table sugar quality standards and our own Kabras Sugar brand quality standards,” the firm said.

Kakamega Senator Cleophas Malala, who has threatened to name the people behind the sugar syndicate in the country, has said politics is behind the current sugar wars.

“West Kenya is both in the imports and manufacturing space and I understand that it was penetrating the imports market to an extent that it rattled the big importers,” Mr Malala said

At the heart of the row is who is allowed to import sugar duty-free under a Government notice in 2017.

The Standard has also learnt that the sugar wars have escalated in the last month after traders started to tell on one another.

When the 2017 shortage hit, then Agriculture Cabinet Secretary Willy Bett said millers would also be allowed to import sugar and rebrand it in their own packaging since the Comesa countries were also facing a crunch.

For a country that consumes about 50,000 tonnes of sugar in a month, the expected imports were the equivalent of a six-month sugar demand in the country.

Facing off

The matter has since landed in court, with the Kenya Revenue Authority facing off with a firm over one of the sugar importers.

The tax agency impounded sugar worth Sh2.5 billion, insisting that the company was not within the parameters set by the gazette notice that allowed importation of sugar and other items to shore up stocks in a time of want.

But the company argued that it imported the sugar legitimately and expected to be allowed to bring it into the market duty-free.

The matter is before the Supreme Court.

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