KENYA – Parliament’s finance committee has approved the proposed sale of of five state owned sugar companies.
In a report tabled in the National Assembly yesterday, the committee argues that it is only through privatisation that the sugar sector can be revitalised.
The five companies are Miwani, Nzoia, Chemelil, Sony and Muhoroni. The committee wants the process fast tracked ahead of the Comesa safeguards on sugar imports which lapses in February.
“The privatisation programme should be expedited to save the sugar factories from the eminent collapse,” the committee recommends.
On October 14, the Cabinet approved the privatisation proposals of the five companies to facilitate rehabilitation and expansion with a view to enhancing competitiveness in the industry prior to lapse of the Comesa safeguards.
The report, tabled in the House by vice chairman Nelson Gaichuhie, warns the government against injecting more capital in the factories as previous attempts have yielded no return.
The committee says the privatisation is necessary because the government requires Sh40 billion to rehabilitate and modernise the five factories.
The companies are heavily indebted and cannot meet their current obligations or to mobilise additional resources as they are unable to meet related debt commitment.
According to the report, the five companies were, as of June 2009, indebted to the tune of Sh59 billion.
In January 2013, Parliament approved the write-off of debt totaling Sh33.8 billion through Sessional Paper No 12 of 2012 but the government is yet to execute the write off.
The report says out of the remaining Sh8.045 billion, after the write-off to clear the excess debt, an additional Sh5.9 billion, which is equivalent of the asset value, be written off to facilitate reconstruction of the sugar mills.