KENYA – In a bid revive the struggling sugar industry, the Kenya has commenced the process of leasing five public sugar factories to private companies, allowing them to oversee mill operations for a duration of 20 years.
The Ministry of Agriculture and Crops Development has identified Nzoia Sugar Company, South Nyanza Sugar Company, Chemelil Sugar Company, Muhoroni Sugar Company (in receivership), and Miwani Sugar Company (in receivership) for the leasing initiative.
The government, through the Agricultural Development Corporation (ADC) and the Development Bank of Kenya (DBK), holds majority stakes in these companies.
The government owns a 98.8 percent stake in South Nyanza, 97.93 percent in Nzoia, 96.22 percent, 82.8 percent stake in Muhoroni, and 49 percent in Miwani. in Chemelil.
According to the Ministry, these factories collectively possess a potential 30 percent market share in Kenya’s sugar industry, which currently stands at 1 million tonnes per annum.
The Ministry stated, “Successful bidders will control factories, office buildings, machinery, equipment, nucleus farms, staff and guest houses, schools, sports stadia, and service contractor yards owned by the millers.”
These sugar factories, facing challenges with aging infrastructure and outdated machinery, often operate below capacity due to insufficient upgrades or maintenance.
The government envisions that private sector involvement will inject fresh capital, enabling the struggling millers to enhance their capacities and explore diversification opportunities such as cogeneration of export power, production of bioethanol, and related by-products.
In 2023, Kenyan president William Ruto assented to the privatisation Bill that paved way for the leasing of the sugar companies.
The president emphasized that the leasing process must be transparent, and the would-be successful private investors should commit to a speedy turnaround, management, and upgrade of the factories.
Concurrently, the Western Regional Commissioner (RC), Irungu Macharia, has urged sugar millers in western Kenya, to self-regulate, to resolve the stand-off surrounding the poaching of cane.
Speaking during a meeting with the millers, a section of farmers, and the security team from the Western Region, the RC said the lack of enough cane has forced some millers to poach and even sometimes harvest immature cane.
He urged the millers to invest in cane development that could sustain their factories, warning that poaching would not be allowed.
“As we review the contracts, sugar millers are supposed to submit to the Sugar Directorate, a register of registered, contracted sugarcane farmers and you have up to February 1st ,to share the inventory of farmers,” he added.
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