Govt writes-off Ksh 40B debt by sugar millers, calls for accountability

President Uhuru Kenyatta has announced that the Government will write-off of Ksh 39.7 billion sugar companies owe to the Sugar Development Levy Fund.

The move is meant to pave the way for privatization and make the firms attractive to investors.

President Kenyatta pledged that the Government will continue to do “everything within its power” to help cane farming get back on its feet in order to improve the livelihoods of the people.

“In return, I expect to see accountability and diligence from those who the sugar companies,” said President Kenyatta.

The President was speaking on Friday at Jamhuri Park when he opened this year’s Nairobi International Trade Fair.

The President said the sector has also received additional financial support from the Sugar Development Fund in the past 24 months.

“Ksh 1.4 billion was disbursed to purchase equipment for use by nine operating mills; Ksh 1.2 billion was given for cane development; another Ksh 2 billion was set aside for affordable credit and grants; and Ksh 1.5 billion was allocated to rehabilitation of sugar mills,” he said.

He said the Government is also implementing policies that will address the high-cost of agricultural inputs, citing enacting and enforcement of regulations that will lower the cost of capital and financial services for farmers and promote agro-processing and value addition.

“My Government recognizes that agriculture is and will continue to play a key role in realising the twin objectives of poverty reduction and shared prosperity as enshrined in our Constitution and our blueprint Vision 2030.”

In early September, the Mumias Sugar Company dispatched 1,200 tons of sugar into the Kenyan market since operations resumed, three months after the government bailed it out.

The company’s Chief of Operations Eng. Josephat Asira said the company is currently crashing 6,000 tons of cane daily producing up to 550 tons of sugar and 70,000 liters of ethanol.

Admitting that the company is under pressure to meet the market demand, Eng. Asira said they have been forced to commence crashing 6,000 tons of cane against the installed capacity of 8,000 tons daily as they gauge themselves.

In June, the government released Ksh 1 billion shillings to bail out the ailing sugar miller.

Since 2011, Mumias Sugar Company has been on a declining trend.

By June 2013, the once thriving sugar miller slid into a loss of Ksh 2.2 billion, occasioned largely by declining cane production.

That loss deepened further by June last year to 3.4 billion shillings.

By the end of the first six months of its current financial year, which ended on June 30th, Mumias Sugar had posted a loss of 1.4 billion shillings.