KENYA – Kenya’s leading sugar miller, West Kenya Sugar Company has inked a Ksh.600 million (US$5.5m) deal with asset leasing firm RentCo Africa, that will see the miller rent farm equipment to boost cane production.
Absa Bank Kenya stepped in as the financing partner of the deal.
RentCo Africa is a leading company in asset leasing and financial advisory services, aiming to address equipment shortages in the agriculture, healthcare, energy, and food processing sectors in the region.
The equipment to be delivered under the deal include semi-prime movers, tractors cane loaders and trucks.
The deal is part of the investments by the sugar firm to ease challenges associated with bulk cane harvesting and transportation, reports Business Daily.
This will help the firm linked to the billionaire Rai family, do away with the burden of buying and maintaining the equipment, freeing capital expenditure that will be diverted towards increasing cane production.
The transaction comes weeks after the company purchased 19 new tractors and trucks worth Sh108 million (US$996k).
While unveiling the heavy machinery at the Misikhu Weighing Bridge in Bungoma County, West Kenya chairman Jaswant Rai, said apart from cane productivity, the tractors will make farmers transportation be efficient, leading to growth.
“Sugarcane transportation to West Kenya factory has been a challenge during bulk productivity coupled by the bad state of the roads in the region hence the need for these equipment to make work easier,” said Jaswant.
A Sugar Directorate report in June shows three sugar companies owned by the Rai family controlled 45 per cent of the total sales in the six months to June.
This has grown from the 41 percent market share they held in the corresponding period last year.
West Kenya had the industry leading share of 29 per cent, while Sukari Industries accounted for 11 percent with Olepito at two percent of the total of 292,040-tonne sales reported between January and June.
West Sugar to bids to lease state-owned factories
The Rai family through its West Kenya Sugar Company and Sukari Industries is also targeting to expand its market share by becoming one of the bidders to lease state owned sugar factories.
The factories to be leased include Chemelil sugar, Miwani Sugar Company which is under receivership, Muhoroni sugar also under receivership, Nzoia sugar company and South Nyanza sugar company.
The government of Kenya approved the leasing of five factories in a bid to increase value addition, farmers’ incomes and improve competitiveness and service delivery in the sugar Sector.
The factories will be leased through long term leases of at least 20 years under Right of Use (ROU) on a firm commitment that the lessee will re-develop and operate factory to meet the governments objectives.
The idea behind leasing is that government will invite investors with experience in the global sugar industry with a focus on sugar as the main product and co –production of ethanol, co-generation of power and value add products such as industrial sugar, pharma sugar and sugar cubes.
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