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Fresh hurdle hits sugar millers privatisation bid

Baraka Karama @PeopleDailyKe

The planned privatisation of five sugar cane companies in western Kenya by the government is facing opposition from regional leaders. Despite the High Court dismissing a court petition that was filed by two ODM politicians last year, the government might be forced to go back to the drawing board over the proposed transaction. Five State-owned millers earmarked for privatisation are Chemelil, Nzoia, South Nyanza (Sony), Muhoroni and Miwani.

They suffer from high debts, cane poaching, high production costs, cheap sugar imports by corruption cartels and absolete machinery. Other issues rocking the firms include shrinking viable land and lack of fast maturing cane. The factories are steeped in debts amounting to Sh100 billion due to mismanagement and dumping of illegal sugar in Kenya.

Government intends to sell 51 per cent stake to private investors and another 24 per cent to farmers and employees. The remaining 20 per cent will be sold to the public once the companies are profitable.

But the huge debts owed by the millers — including farmers’ dues — are worrying, hence raising doubts on whether the privatisation is viable or not. Miwani and Muhoroni are in receivership while Chemelil and Sony is owed Sh5 billion and Sh3 billion respectively.

Cane farmers in the region have often staged demonstrations demanding payment of their dues from the millers. Governors and MPs from the region have now vowed to mobilise farmers and key stakeholders in the region to stop the move until a consensus is reached.

Governors Peter Anyang’ Nyong’o (Kisumu) Okoth Obado (Migori) and Stephen Sang (Nandi) said the government should instead focus on reviving the collapsed sugar industries before embarking on the privatisation process.

“We should not sell our sugar factories and yet we have not even addressed the plight of farmers in the region. Privatisation should not be for purposes of mere disposal of assets,” Nyong’o said. His Nandi counterpart Stephen Sang said views of various stakeholders like the farmers should not be ignored.

“We should not hurry, let us go back to them and seek their opinion.” Nyongo challenged the government to have a guiding framework for the process before rushing into making the decision.

“We should first address the key issues and look into better ways of solving the problems instead of jumping into privatisation,” he said. Importation of sugar Against a demand of 800,000 tonnes of the commodity, Kenya produces about 600,000 tonnes of sugar annually. The deficit of 200,000 tonnes is offset by importation of sugar which has threatened the survival of the industry.

At least six million people are supported directly or indirectly with the sugar industry that contributes 7.9 per cent of the country’s gross domestic product. “Let us not hurry this issue, just the other day we had problems in Mumias.

Why rush to privatise our factories and yet we have not yet solved the key problems affecting the industries,” said Kiminini MP Chris Wamalwa. The government pumped Sh3.7 billion to bail out Mumias Sugar Company that was on the brink of collapse.

Rarieda MP Otiende Amollo said percentage of privatisation of the sugar cane companies should be commensurate with its percentage ownership. “Take Muhoroni for example, the government only has 16 per cent while Miwani Sugar company has 49 per cent.

The rest are for farmers,” he said. In his response, Agricuture Cabinet Secretary Willy Bett said the government would sort out the ownership structure of the sugar millers by March. “All the issues you have raised will be looked into and I can assure you that we will come up with a better agreement for all of us.”

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