Government releases Sh150million salary arrears for Nzoia sugar employees

President William Ruto hes received by Nzoia sugar company board members on August 28, 2023. [Benjamin Sakwa, Standard]

Nzoia Sugar workers are a happy lot following an announcement that Sh150 million will be released by the government for payment of their salary arrears.

The money is expected to be released in two weeks as announced by President William Ruto during his tour of the county last week.

Speaking during inter denomination event at Amutala Stadium in Kimilili, Bungoma County last Sunday, Ruto disclosed that the allocation had been factored in the supplementary budget.

"After writing off the Sh53 billion debts Nzoia sugar owed to farmers, suppliers and its creditors, we promised to look for more money to cater for salary arrears. They will get paid in a week's time," said Ruto

He went on: "Going forward, the government will not be bailing out a company that receives sugarcane from farmers, crushes and then sells sugar. The managers then put the money into their pockets and ask the government to help them pay farmers and the employees again."

The President said Nzoia sugar has "disturbed us for close to 40 years" due to mismanagement and runaway corruption. 

He added: "We have placed the sugar factory on a leasing program and a new management will be put in place so that we can start realising profits."

Ruto said the new investor will ensure cane farmers get bonuses every year as is the case with coffee and tea farmers.

The miller has a total of 4,229.01 hectares and boasts of over 67,000 contracted farmers.

"Farmers within Nzoia sugar belt will start earning bonuses. The factory has nucleus estates and must give farmers bonuses because those pieces of land belong to the public," said Ruto.

He also announced that the hurdles that stood in the way of the revival of Mumias Sugar Company had been removed. "We have signed all the agreements with the investor and the factory should resume its full operations," he said.

Mumias sugar company was not factored in the plan when the state wrote off Sh117 billion in accrued debts owed by sugar mills.

A June 4, 2021, report by Rao, then receiver manager, showed that Mumias Sugar had assets of Sh15.7 billion and liabilities of Sh30.1 billion.

“The net assets/owners’ equity stood at negative Sh14.4 billion, which implies that the company could not meet its short-term and long-term financial obligations and therefore insolvent,” reads part of the report presented to the Senate.

Efforts to revive the company had faced numerous court cases until President Ruto intervened.

Uganda’s Sarrai Group took over the sugar mill about two years ago.  "From the agreement we signed with the investor, Mumias sugar should resume full operations soon. The only agreement we haven't signed is Co-gen," said Ruto.

A section of farmers interviewed in Bungoma and Kakamega counties welcomed the government plans.