Mumias Sugar closes down for 45 days on cane shortage

Inadequate cane has forced Mumias Sugar Company to close down for 45 days during which time the miller will undergo maintenance.

The firm’s managing director, Coutts Otolo, cited shortage of raw material for the closure as well as the need to conduct annual maintenance. He said Sh1.5 billion had been set aside for the exercise.

“We did not take a break in May as expected. All sugar firms usually shut to appraise machines and we are no exception,” Mr Otolo told journalists. The MD said the available sugarcane was too young to be harvested, adding that the crop will be mature when the miller resumes operations.

Mumias has been operating at 70 per cent of its daily cane crushing capacity of 8,0000 tonnes. The miller says it will rely on old stocks to maintain its market share as it races to return to profitability after reporting a wider loss before tax of Sh2.7 billion in 2014, from Sh1.6 billion a year earlier.

Mr Otolo dismissed claims that the current cash flow problems forced the management to suspend operations.

“There can be nothing further from truth since we have been able to mobilise enough money for undertaking the maintenance exercise,” he said.

The firm has been struggling financially despite the fact that it is the only miller in the country that has diversified into other revenue streams such as power cogeneration and selling bottled water.

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“Sugar production shall be put on hold but both the ethanol and water plants will remain operational,” said Mr Otolo.

The firm’s shares closed at Sh1.95 on Monday after shedding a third of its value over the past six months, making it the worst performing stock at the Nairobi bourse over the period.