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Nzoia Sugar receives Sh500m bailout cash from Treasury

Agriculture CS Peter Munya (c) with other leaders when they handed over a dummy cheque of Sh500 million to Nzoia Sugar Company. [Benjamin Sakwa, Standard]

The national government has released Sh500 million to Nzoia Sugar Company in its efforts to revive the miller.

The money is part of the Sh1.5 billion the National Treasury set aside to bail out ailing state-owned sugar companies in Western Kenya.

Agriculture Cabinet Secretary Peter Munya, who handed the cheque to the company yesterday, said the money will go towards paying farmers, workers, and servicing machines at the factory.

"The money will kick-start operations of the miller while boosting the morale of the employees and farmers," said Munya who spoke at the company's offices on Kanduyi constituency, Bungoma County.

He added: "At least Sh200 million will go towards servicing the machines and carry out some repairs at the factory to increase its grinding efficiency."

At the moment, the factory produces one tonne of sugar from 15 tonnes of sugar cane crushed.

"This should not be the case. In an ideal situation, the miller should make a tonne of sugar for every 9-10 tonnes of sugarcane crushed," said the CS.

Another Sh200 million will be used to pay farmers while Sh100 million will go towards the salaries of the company's about 700 employees. The last time the workers were paid was in April last year.

The firm owes farmers Sh743 million while transporters are owed Sh182.4 million. Cane harvesters have been demanding Sh71.3 million.

Nzoia Sugar owes Nzoia Out Growers Company (NOCO) Sh4.8 million. Unpaid cess to the county government stands at Sh10.1 million.

President Uhuru Kenyatta announced a stimulus package of Sh1.5 billion to support the sugar sub-sector.

"Last week, my ministry sent a team of auditors and engineers to assess the status of farmers’ arrears and factory requirements in all the four sugar mills of Nzoia, Chemelil, Muhoroni, and Sony," said Munya.

He said a new board will be set up to oversee the factory. 

Nzoia Sugar has been without a board since Munya dissolved the one headed by Joash Wamang'oli in August last year.

The CS regretted that poor management had brought down many sugar companies and urged the management of Nzoia Sugar to ensure integrity in running the debt-ridden company that was established in 1978.

Munya assured the farmers that the national government is determined to protect them from the cheap sugar imports by sealing all loopholes through which the imports are smuggled into the local market.

He said unscrupulous businessmen engaging in the illegal business would be dealt with firmly.

Defence Cabinet Secretary Eugene Wamalwa who accompanied Munya said the money would go directly to the farmers and service providers.

"In previous bail-outs, we have been leaving the money in the hands of managers of the ailing companies but today we are targeting the farmers directly," said Wamalwa.

Munya and Wamalwa lauded the Sugar Bill being pushed in parliament by Kanduyi MP Wafula Wamunyinyi saying it would revolutionize the sector.

Wamunyinyi has been at the forefront, fighting illegal sugar imports. He has also been calling for streamlining of the sugar sector, goals he says will be achieved through his Bill.

“We are done with debating the Bill in the National Assembly and I now petition the senate speaker Ken Lusaka to fast tract the law in the Senate so that the sugar industry can realize sanity,” said the lawmaker.

Among other things the bill advocates for research and innovation in the sector besides putting stiff conditions on sugar importers and advocating for the rights of sugarcane farmers.


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