Ray of hope for sugar mills in new Sh50b debt write-off plan
There is a ray of hope that things will soon improve for the financially distressed State-owned sugar factories in the cane-growing belt of Western Kenya.
President William Ruto has made a fresh commitment to revive five sugar millers in the region, disclosing that a Bill was being drafted that would see the multi-billion shillings debt currently weighing them down written-off.
The once vibrant and dominant sugar millers in the region including Mumias, Chemelil, Sony, Muhoroni, Nzoia and Miwani are in a sorry state amid pilling debt, aging machinery, and biting shortage of raw materials.
Ruto said the government is committed to full revival of the millers by writing off debts estimated at more than Sh50 billion out of which Mumias owes Sh16 billion.
The head of State who spoke in Kakamega town when he attended a Sunday service at the weekend, pointed out that the Bill, which would be tabled in Parliament, was meant to cushion the companies from collapse.
“Writing-off of the debts will boost our current efforts to revive the millers and return them on the path to profitability,” the head of State added.
Ruto said the main challenge facing the sugar firms were massive debts whose interests and penalties kept accumulating.
He said the companies would become more attractive to suitable private investors if they are declared debt-free.
The President said the Bill had included recommendations from the various sector stakeholders including a report by a sugar taskforce that was chaired by former Kakamega Governor Wycliffe Oparanya.
It recommended, among others, the waiving of the debts owed by each of the firms the way the government had done for the coffee, tea and milk sectors.
Members of the committee also urged the national government to cede its shares in the millers to respective devolved units. They further called for hastening of the revival process to end exploitation by receivers.
A section of leaders from the region expressed optimism that the sugar companies will be back on the recovery path following the President’s announcement that the government was drafting a Bill that would see the debts written off.
Kakamega Governor Fernandes Barasa said the announcement by the President had handed them a fresh hope.
“The massive debts that Mumias owes suppliers and banks have been the main bottlenecks towards its full revival. Thousands of families that relied on the miller are now losing their loved ones at an alarming rate, due to depression,” the governor said. He added: “I plead with the President to expedite the Bill which will automatically hand a lifeline to the miller.”
The sentiments were echoed by Kakamega Senator Boni Khalwale who, however, opposed privatisation of the sugar firms.
“Some so-called investors have other motives and may kill and bury the companies altogether. They could just be after the property, especially land. I, thus, propose that the government comes to the rescue of these firms by writing off their debts after which they can begin their journeys to profitability,” he added.
Lurambi MP Titus Khamala said the ongoing resuscitation of Mumias had already started benefiting farmers as it had raised prices of cane due to increased demand for the cash crop.
“I am a sugarcane farmer and I confirm that I am proud for the first time in my entire life because I am making some money for cane delivered to Mumias,” he said.
In the past, Khamala added, it was hard to even obtain a harvesting permit or having the cane delivered to the available factories. “So, if the government waives the debts then it will automatically translate into profits and our economy will start growing once again,” he said.
Malava MP Malulu Injendi said even though his Constituency plays host to both West Kenya and Butali sugar companies, he supported the rescue of Mumias to up competition and inspire people to venture into and return to sugarcane farming.
Mumias East MP Peter Salasya urged the President to be wary of some politicians from the region who were opposed to revival of Mumias and Nzoia.
“Some of them are working with the owners of West Kenya and Butali to frustrate revival of Mumias. They are always picking money from those Asians and I believe the President will not be misled into reneging on a pledge that he made in church,” he said.
Ruto said privatisation of the firms would follow strict government rules and procedures to ensure the locals benefited.
“For instance, no investor will lay claim to the lands and other property owned by the factories. These will remain in the hands of the public,” said the President.
“Mumias Sugar Company alone owes over Sh16 billion and we cannot expect it to fully get back on its feet when it has such a burden. That is why I am urging our Members of Parliament to pass the Bill once it is tabled in the House,” he added.
