Companies

Pipe leakages at Mumias Sugar disrupt milling

MSC

The Mumias Sugar factory. Leakages on the plant’s main pipes has hit production. PHOTO | FILE

Pipe leakages at Mumias Sugar have disrupted operations at the factory, limiting cane milling to sometimes only five days in a week.

The leakages have caused spillage of sucrose which has in turn increased the amount of cane that the miller requires to produce sugar, suppressing margins for the loss-making company.

Mumias, which is partly State-owned, is seeking a Sh5 billion bailout by way of a government rescue package as well as a shareholders’ cash call.

“We have been experiencing leakages on our main pipes and as a result we have had to use more cane than is required to make a tonne of sugar and this has interrupted our production schedule,” said Mumias managing director Coutts Otolo in an interview.

Stoppage of operations has also seen Mumias record a drop in output relative to cane deliveries as sugarcane is supposed to be crushed within 48 hours of being cut.

The leakages come just five months after Mumias re-opened after its customary annual maintenance shutdown.

Mr Otolo says the annual maintenance was affected by inadequate funds that limited repairs at the plant. On April 21, Mumias spent 17 tonnes of sugarcane to produce one tonne of sugar, according to the miller’s operation report seen by the Business Daily.

The factory ordinarily requires 10 tonnes of sugarcane to make one tonne of the sweetener. Mr Otolo said the company has ordered spare parts from abroad, which are expected within two weeks.

“We will (shut down) for close to a week to fix the problem once the spare parts arrive in the country,” he said.

The month-to-date production report indicates that Mumias converted 74,629 tonnes of cane into sugar as at April 21, implying an equivalent operation period of less than 10 days given that the miller has a daily capacity of 8,500 tonnes.

READ: Mumias Sugar reports Sh2bn loss, H1 revenues down 62pc

Disruption in one operation affects other revenue stream chains that depends on crushing of cane for production.

Generation of electricity at Mumias’ co-generation plant, for instance, relies on bagasse while ethanol production depends on the molasses by-product.

Mumias depends on these products to boost its income.

The miller owes Sh6.5 billion to creditors including banks, and began talks last year to reschedule repayments. The firm has asked the Government for Sh2.3 billion to meet its obligations, including paying farmers’ dues.