Debt, KRA demand at the heart of Muhoroni closure

It is now emerging that the closure of Muhoroni Sugar Company over the weekend was as a result of piling debt and not sugarcane shortage.

Citizen Digital has learnt that the miller has been slapped with a Sh861 million tax demand by the Kenya Revenue Authority (KRA) while it owes its contracted farmers over half a billion shillings.

While the company had indicated that the closure was as a result of inadequate cane supply, it is emerging that this could have been a smokes screen.

Citizen Digital has seen a letter from the taxman indicating that the beleaguered miller owed it over Sh860 million in tax areas.

This includes over 212,000 in Pay as You Earn (PAYE) arrears, 387,000 in unremitted VAT and 266,000 in Sugar Development Levy collection.

KRA has written to distributors to pay to its accounts any sales proceeds due to Muhoroni Sugar.

Farmers have blasted the miller’s management for the cover-up intended to conceal the closure.

“Muhoroni was supposed to call stakeholders to call them, so that they could be aware, they have done it so abruptly because they owe farmers and other people a lot money, it is a ploy to avoid paying farmers their areas,” Charles Oguyu Otieno a Kisumu cane farmer said.

The rationale behind sending the staff on six weeks paid leave has also being questioned by farmers.

Muhoroni is among the five government owned factories slated for privatization.

The company which was formed in the 1960s has the capacity to crush more than two thousand two hundred tons of cane daily.

With the other sugar factories facing similar challenges, the country could be staring at a possible sugar shortage once again.

According to Agriculture and Food Authority, AFA Sugar Directorate, Muhoroni accounts for 6.6 percent market share and is best known for production of brown sugar.

Kenya’s sugar production has been on a downward trend over the last decade, with the annual production estimated at six hundred thousand tons, against a consumption of nine hundred thousand tons.