Top five sugar companies privatized

Five big sugar companies in Kenya that are indebted with huge amounts of money will be privatized for a period of five months.

The chairman of privatization commission Henry Obwocha has said among the sugar companies that will be privatized are Nzoia Sugar Company which has a debt of Ksh 29billion, while sonny has a debt of Ksh 1.2 billion.

However the pending payments have raised anxiety among cane farmers considering that the companies will be under the new management yet most of them not received their payments.

Over the last few weeks the commission of privatization had held dialogue with Nzoia, Chemilili, Muhoroni, Miwani and Sony. However Mumias sugar which is the biggest company was not involved in the plan of privatization.

The Government had set aside 30 billion to solve huge debts encountered by sugar companies which includes payment of farmers.

The company that is set to benefit from this plan is Mumias Sugar Company which was granted Ksh 1 billion to pay farmers and revive the operation of that company.

The Government has approved of five sugar companies and expects to sell 75 percent stakes in transactions that will be completed in the next five months.
The five companies are in urgent need of modernization to survive competition from the entry of other sugar producers and an impending end to sugar import limits from the Common Market for Eastern and Southern Africa (COMESA) trade bloc after the end of a one-year extension given early this year.
Two of the businesses, Muhoroni and Miwani, are in receivership.
The Privatization Commission has sold 51 percent of each of the millers to strategic investors with a track record of those sugar companies.
A further 24 percent share of the companies has been sold to employees and out growers --farmers who grow sugarcane on contract for the mills.
The East African nation is also struggling to improve output because of relatively high production costs and produces a total of 600,000 tonnes of sugar a year, compared with annual consumption of 800,000 tonnes.
The deficit is covered through the strict import quotas from COMESA.
The leading sugar producer Mumias Sugar company reported a 2014 pretax loss of 3.4 billion shillings ($38 million), compared with a 2.2 billion shilling loss the previous year, blaming weaker sugar prices.
The Privatization Commission has said they have reserved 6 percent stake for farmers.
By Reuben Wanyama