Government completes 30-year lease agreement for 4 sugar companies
The government has finalized leasing agreements for four sugar factories to private millers for 30 years to revive the struggling sector. Agriculture CS Mutahi Kagwe announced the move, ensuring no public land is sold and assets remain state-owned. A phased Sh5.6 billion worker arrears payment plan and a one-year workforce transition period have also been outlined.
The government announced it had finalised the agreement to lease four sugar factories to private millers in a bid to revitalise the struggling sugar industry.
Agriculture Cabinet Secretary Mutahi Kagwe revealed that the government competitively procured four private millers to take over the operation of the four sugar factories for 30 years.
West Kenya Sugar Company took over Nzoia Sugar Company, while Kibos Sugar and Allied Industries Ltd would handle Chemelil Sugar Company.
Sony Sugar Company was leased to Busia Sugar Industry, and West Valley Sugar Company Ltd would handle Muhoroni Sugar Company. Kagwe explained that the move was necessary to inject much-needed capital into the sector.
He noted that the government paid over Sh1.7 billion to sugarcane farmers and Sh600 million to factory workers in the past year.
Since then, the arrears owed to factory workers have accrued to Sh5.6 billion, funds which the government has promised to settle by June 2026.
This will be done in a phased payment schedule, which includes Sh1 billion to be paid to workers upon takeover in May 2025, Sh1.5 billion to be released in July 2025, and Sh1.17 billion to be released quarterly until June 2026.
The CS added that there would be a one-year transition period during which the private sector shall evaluate its workforce and determine how to retain current employees.
“I would like to assure the public and all stakeholders that the negotiated terms represent the best possible outcome to ensure the revival of the sugar sector. I call upon your continued support in realising this vision. The Ministry remains fully committed and ready to address any concerns that may arise,” Kagwe remarked.
The Ministry assured the public that no public land would be sold or acquired under the leasing agreements.
Further, all assets belonging to the four sugar companies would remain the government’s property.
“The assets will be leased out to the lessees annually based on the prevailing market rate with all proceeds being collected by the Kenya Sugar Board for reinvestment into communities around the four factories and for utilisation in cane development.”
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Source : Kahawa Tungu
