Mumias Sugar begs State for KSh3.41 billion bailout

KENYA – Cash-strapped Mumias Sugar Company has asked the national government for an additional Sh3.41 billion to support its recovery.

Board chairman Kennedy Mulwa said the cash is needed to take care of some pressing payments including farmers’ arrears running into millions of shillings.

“Part of the money will also be used to pay workers’ two months arrears and procure new equipment for the factory,” he said.

The factory has closed down for annual routine maintenance expected to last three months. Mr Mulwa refuted claims that the company had closed indefinitely due to financial and management problems.

“The factory closed for maintenance even though inadequate raw materials partly contributed to its closure. We expect it to go back into full-throttle operations once we have enough raw materials,” he said.

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Earlier, Mumias East MP Benjamin Washiali and his Navakholo counterpart Emannuel Wangwe confirmed that Treasury had received the proposal for additional funding from the management.

They said they will push for the National Government to increase funding to the company.

Best solution

“Mumias Sugar Company requires more funding. The Treasury has the proposal for Sh3.41 billion and we will push to ensure the company gets the money,” said Mr Wangwe.

“The company should invest in farmers and reduce manpower so that it can compete with other millers on the market.” Mr Washiali said restructuring of the company’s management is the best solution to enhance its operations.

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“It is timely for the company to restructure. The additional money should be used to pay farmers first to motivate them to continue with cane farming,” he said.

But speaking during an interview with The Standard, Kakamega Governor Wycliffe Oparanya argued that Mumias Sugar may require at least Sh12 billion to recover fully from current financial problems.

“Mumias Sugar Company should be given Sh12 billion to facilitate its turnaround process.

The factory is in dire need of new equipment, clearing farmers arrears and streamlining its operations,” he said.

The governor said the Sh3 billion bailout was a drop in the ocean. Mumias Sugar started experiencing financial hiccups back in 2009 and has since closed down the ethanol and water plants in a move to cut costs.

The meltdown has been blamed largely on mismanagement of the company, cane poaching and scarcity of raw materials.

The board hired Australian Errol Johnston as chief executive about two years ago with hope of reviving the company, but he failed to make significant headway and has opted to exit the factory on expiry of his contract in July.

May 11, 2017: The Standard

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