KENYA – Mumias Sugar Company Limited, a once leading sugar manufacturing company in Kenya, reported a net loss of US$150.68 million (KSh15.1 billion) during its 2018 financial year against the previous year’s loss of US$67.86 million (Sh6.8 billion).
Mumias said that the steep rise in the loss was driven by a 101% increase in impairment charges to the firm’s plant and machinery, the de-recognition of deferred assets leading to a tax expense of US$49.85 million.
Additionally, Kennedy Ngumbau, Chairman Mumias Sugar, highlighted acute cane shortage and low production following plant shutdowns in the first and second quarter of the year as major causes.
“The cane shortage significantly hindered throughputs with cane delivered dropping by 32% compared to 417,347 tons last financial year,” he said.
However, despite the dismal performance, the board is however optimistic of the miller’s recovery earmarked by the government’s intervention through settling US$6.98 million owed to farmers which is expected to boost cane supply.
The management is also hoping that efforts, like cracking down on illegally imported sugar and ethanol and push to resume cane zoning, will help improve miller’s fortunes.
“Discussions with the lenders to restructure the debts and extend the standstill arrangements are ongoing to obtain much needed financial support,” the management said.
A report by Business Daily reveals that the government through the Ministry of Agriculture revealed has already disburded about US$18.89 million to offset the millers’ debts to farmers in the country’s sugar belt region.
This comes at a time when ministry and the Privatisation Commission have embarked on efforts to privatise the millers which have been facing financial problems.
Hon. Raila Odinga, former prime minister has emphasised on the need to urgently address the problems dogging the sugar industry to improve production and ensure sustainability of the debt-ridden mills.
The inclusion of private companies in the management of the sugar factories, he emphasized, is key to revitalizing the industry.
“The survival of the sugar industry is at stake and we must support efforts by the Government to find a lasting solution to the problem.
We need to strategic partners to help us in the process of revitalizing the mills. We should allow the private companies also to take over the management of some of the companies,” he said.
Raila highlighted deplorable state and lack modern equipment in major state-owned mills and low production as major impediments hindering country’s sugar industry to compete regionally or globally.
He rooted for completion of the privatization process to improve production.