Agency cuts Sony Sugar’s Sh500m loan cost with low-interest bailout
Sony Sugar boss Jane Pamela Odhiambo at a media briefing in Nairobi on September 5. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
The money will be used to pay farmers’ dues that have been pending since March. The company owes cane growers up to Sh447 million.
Sony Sugar Company will reduce the loan amount that the firm was to acquire from the Cooperative Bank following the advance of a cheaper loan from the sector regulator.
Cooperative Bank had approved a Sh500 million loan for the sugar miller last week, a move that coincided with the release of Sh447 from the Sugar Directorate. The bank was issuing the loan at 12 per cent interest while the loan from the sugar fund is charged at an interest of five per cent, to be repaid in a period of five years.
Sony Sugar managing director Jane Odhiambo said the firm would take part of the Sh500 million loan that they had applied for from the lender. “We are going to reduce the amount that we had applied for and only take about Sh100 million from the bank in order to meet our daily operations,” said Ms Odhiambo.
The money will be used to pay farmers’ dues that have been pending since March. The company owes cane growers up to Sh447 million.
Ms Odhiambo said the company started paying farmers last week after receiving the funds, noting that the amount would pay the dues up to July. She blamed the delay in paying farmers on poor sugar sales occasioned by competition from illegal cheap imports.
“The company has for the last one year grappled with the problem of delays in payment because of low sales of our commodity,” she said.
This year, the company paid Sh1.2 billion from its internally generated funds to farmers and they intend to offset the outstanding debts using the funds from the directorate. In the last financial year, Mumias Sugar Company received Sh500 million from the directorate while Nzoia got Sh1 billion to pay farmers.
