5 Collapsed Sugar Millers With Sh90 Billion Debts

Even though the government said they have placed 5 major sugar millers who are financially struggling under receivership, most of the State-run sugar millers have combined staggering debts totaling to Sh90.4 billion.

According to a report prepared by the national sugar task force, that recommended the return of the Kenya Sugar Board and reinstatement of Sugar Development Levy had also stated in their last year’s recommendations that the State should zone sugarcane growing areas and merge poor-performing State-owned millers. This meant sugar factories were to be barred from buying cane outside their licensed zones.

The latest report says the dismal performance of the milers indicated that their long-term lenders, mostly the government, are not protected as the loans were barely serviced. Top on the list is the collapsed Miwani Sugar that has an outstanding debt amounting to Sh27 billion while Muhoroni Sugar Company owes Sh25.1 billion.

Sony Sugar Company owes the government Sh6.2 billion while Chemilil Sugar’s debt amounts to Sh6.1 billion. The Mumias Sugar Company, currently under KCB receivership, has an outstanding debt amounting to Sh4.8 billion, excluding taxes, penalties, and fines.

The other five companies had a deficit shareholders fund, which translates to negative equity. According to the report, Chemilil had -Sh2.6 billion, Nzoia Sugar Company -Sh37.3 billion, Miwani Sugar Company -Sh22.9 billion; Muhoroni Sugar Company -Sh26.2 billion and Mumias Sugar Company -Sh-14.4 billion.

Last year, the task force members recommended that all the three sugar factories in the Nyando sugar belt – Chemelil, Muhoroni, and Miwani – be merged. Of the three, only Muhoroni which has been in receivership since 2000 is operating at low capacity. Miwani shut over 20 years ago and only exists in name while Chemelil stopped milling over eight months ago due to a lack of service and money to pay workers and farmers.“The proposed merger will help optimize sugar production to meet national demand, with a surplus for export. A merger will also improve sugarcane production and optimize income for cane farmers,” said the report. 

Other proposals include bringing back the Sugar Development Levy (SDL), which former Treasury Cabinet Secretary Henry Rotich removed in the last financial year. Removal of SDL, charged at four percent of the value of sugar, was a proposal from stakeholders and agriculture ministry, with the aim of raising revenue for farmers.

Kenya National Alliance of Sugarcane Farmers Chairman and former MP Saul Busolo opposed the taskforce recommendations stating that their proposals were not considered.

He was seconded by Kenya Sugarcane and Allied Products and the Kenya Sugarcane Growers Association Chairman Charles Atyang who also said that the report fell short of their demands.