New Mumias CEO takes over at miller

KENYA – Australian manager Eroll Johnson has officially taken over the running of Mumias Sugar Company (MSC) for the second time in a quiet handover ceremony at the Western Kenya-based miller.

The expatriate, on whom farmers and shareholders are banking to turn around the fortunes of the company, has already started paying them their dues, after taking over the job last week.

He was the company’s managing director 15 years ago.

Mr Johnson, who has joined a new management team that was recruited recently to strengthen and support the firm’s turnaround plan, takes over at a time when farmers have lost patience with the company over unpaid debts running into billions of shillings.

BAILOUT PACKAGE

Mumias Sugar, once a giant miller that controlled over 60 per cent of the sugar market share, nearly collapsed before turning to the taxpayer for a Sh1billion bailout package that was delivered recently.

The new chief executive is understood to have already started talks with Kenya Power to restore electricity connection at the miller.

“He said as soon as he arrived that using diesel is no longer tenable especially at this time of maintenance. He was in Nairobi last week to try and strike a deal that would see Kenya Power reconnect the company,” a source at the firm told The Standard yesterday.

The factory’s maintenance is scheduled to run till the last week of this month. The company is expected to resume operations at a time it has lost a significant market share.

MSC has been operating in darkness and only relying on diesel to run its generators, an expenditure that has complicated its affairs.

As an electricity generator, the firm needs to start its generators before producing. But it defaulted on its deal with Kenya Power to supply electricity to the national grid, in a controversial deal that saw it slapped with a Sh1billon bill from the electricity distributor.

The company has also started paying farmers after conducting an audit to flush out ghost recipients on its books. Last week, MSC started paying farmers whom it owed Sh20,000 and below.

This week, it will turn its focus on farmers it owes Sh50,000 or less, as it scales upwards to the big debts. The new boss is already being briefed on the miller’s operations.

“He has already been given two reports, one on the factory and the other on the agricultural department. The agricultural report has details such as the out-growers and harvesting departments at the company,” the source said.

TRANSITION PERIOD

The former Chief Executive, Coutts Otolo handed over after serving for a year, having replaced Peter Kebati. Mr Otolo has not been seen at the firm’s premises since.

“There was a 15-day transition period. Employees are excited with the new change but it is still too early to tell the kind of manager he is going to be this time round,” he said.

But the new CEO is not a stranger to the sugar miller. He worked in the same capacity between 1988 and 2001 and it is expected he will manage to start with the benefit of hindsight.

MSC Chairman Daniel Ameyo described Mr Johnson as a manager with an “extensive experience” in the sugar industry worldwide.

“He is not new to this factory given the fact that he served here before,” Mr Ameyo said in a statement after the appointment. The first task for the new boss will be paying farmers as some uprooted sugarcane and have been replacing it with other crops to cut their losses.

Others have opted to sell it to the new players in the sugar belt such as West Kenya. But it is how he will deal with the competition for cane due to increased sugarcane poaching that is set to define the term of Mr Johnson’s term.

The new executive is expected to close the gates of corruption and theft in both the sugar and ethanol business lines that nearly collapsed the miller.

Mr Johnson will also be expected to steer the company through a rights issue that the Government hopes will raise about Sh4.2 billion to further boost the miller’s capital. 

August 11, 2015; http://www.standardmedia.co.ke/business/article/2000172374/new-mumias-ceo-in-talks-with-kenya-power-after-quiet-handover

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