The Competition Authority of Kenya has allowed a Mauritian company to acquire a controlling stake in Transmara Sugar, indicating foreign investors’ big appetite for Kenya’s sugar industry.
The acquiring firm, Sucriere Des Mascareignes Limited (SML), is a subsidiary of the Mauritius-headquartered Alteo.
“It is notified for general information that the Competition Authority of Kenya has authorised the proposed acquisition of 51 per cent of the issued share capital of Transmara Sugar Limited by Sucriere Des Mascareignes Limited,” the agency’s director-general Wang’ombe Kariuki says in an August 28 gazette notice.
The SML has already outlined a three-year plan to expand Transmara Sugar’s cane-crushing capacity to 1 million tonnes, up from the current 400,000 tonnes.
The expansion will make Transmara the second largest miller after the cash-strapped Mumias, which has a potential of crushing two million tonnes. Sony Sugar and Kwale International Sugar Company Ltd (Kiscol) each have an annual capacity of 900,000 tonnes.
Another Mauritius-based manufacturer, Omnicane, which acquired a 25pc stake in Kiscol, spent Sh18 billion on expanding its factory to a daily milling capacity of 3,000 tonnes of cane.
Of the 19-member states Comesa trading bloc, Mauritian firms are reputed to produce the cheapest sugar helped by modern equipment and factory efficiency.
Kenya, on the other hand, is seen by sugar suppliers as Comesa’s most lucrative market. The country is ranked by the World Bank among the countries where consumers pay the highest prices for sugar globally.
Both the SML and Omnicane are set to upgrade their milling plants and expand production to include co-generation, bagasse and methanol production – with ensuing efficiency and competition pulling down the unit cost of sugar production.
“We are already selling 50-kg bags in the market but the full impact of our production will be seen next year when we begin the mass production and packaging of lower units in packets of 500 grams, one or two kilogrammes,” Kiscol spokesperson Hashil Kotecha told the Business Daily on Monday.
Kenya produces about 600,000 tonnes of sugar but consumes more than 800,000 tonnes annually. The production deficit is plugged by supplies from Comesa states.
The entry of Mauritius firms is likely to complicate matters for Ugandan firms that are also eying the Kenyan market as the new players are likely to fill their import quota.
The SML-Transmara team joins a list of private players who include West Kenya, Soin, Kibos, Kiscol, Butali and Sukari.