Sugar millers in crisis after dissolution of boards

Three State-owned sugar mills are headed into a crisis following dissolution of boards of management in July last year.

While Agriculture Cabinet Secretary Peter Munya disbanded the boards to give room for the leasing process and hand over the management to private entities, the delayed handover continues to threaten operations of the struggling companies.

Kenya Union of Sugar Plantation and Allied Workers (Kuspaw) General Secretary Francis Wangara has raised concern that the situation is getting out of hand, as the chief executive officers have to seek consent and approval from the Ministry of Agriculture.

Unfortunately, he said, ministry officials are delaying approval and implementation of significant programmes and financial obligations, thereby paralysing some key functions of the millers.

“This is affecting their performance as most of the managers have been forced to suspend making critical decisions involving huge sums of money without the relevant approvals,” he said.

Mr Wangara further cautioned that the move could cause the management to engage in illegalities and lead to loss of public funds.

“Due to prolonged delays by the parent ministry, the management of the companies is sometimes left to make unilateral decisions,” Mr Wangara said.

CS Munya, in a Gazette Notice dated August 3, 2020, revoked the appointments of all members of the boards with effect from July 16, 2020.

The affected millers include Nzoia Sugar Company, Chemelil Sugar Company and Awendo-based Sony Sugar Company.

The government, while revoking the appointment of the board members, called for bids from interested investors to run the factories for 25 years and return them to profitability as well as pay accrued debts owed to cane farmers and lenders.

Successful financiers are expected to lease, re-develop and operate the sugar complexies at sufficient processing capacities to support diversification into co-generation of export power, production of bioethanol and allied co-products.

The Agriculture Ministry, in September last year, indicated that it has received bids from 29 companies which have expressed interest, among them two firms linked to tycoon Jaswant Rai, China CAMC Engineering Company Limited, Shenzhen Start Instruments, Mehta Group, Kibos Sugar, Butali Sugar Mills, Mini Bakeries and Kuguru Food Complex.

However, Mr Wangara, who was incorporated into the Interim Management Committee on the leasing of the factories, accused the ministry of failing to spearhead the process over five months after appointment.

“While the government revealed an elaborate strategy that could re-energise the sector which is currently on its knees, we are concerned that the CS has decided to go quiet,” said Mr Wangara.

He said that the committee, chaired by Agriculture Cabinet Administrative Secretary Anne Nyaga, last met in October 2020.