Mumias Sugar shuts operations for three months to allow maintenance

Mumias Sugar Company will on Monday suspend operations for three months to allow urgent maintenance work.

Chief executive officer Errol Johnston on Tuesday said the closure was informed by the prevailing weather conditions and will enable them fix faulty equipment in the factory.

“This is to bring to the notice of our farmers and stakeholders that management of Mumias Sugar Company Limited wishes to take advantage of the prevailing weather conditions to shut down the factory for routine repairs and maintenance,” said in a statement to the newsroom.

He said the final run boil-out will be on Sunday April 10. “This strategically takes advantage of the onset of this year’s long rain season,” he said.

Mr Johnston said heavy rains have been an impediment to smooth harvesting and transport operations given the heavy farm machinery, tractor and loaders used in the process, besides damaging the sugarcane crop.

He said the closure will also be a good opportunity for the young cane to grow and mature.

Scramble for raw material

Sugar cane factories have been scrambling for the raw material, encouraging poaching that has been witnessed in the recent past.

The closure comes a few weeks after the cash strapped miller was given Sh239 million as part of the Sh1 billion bailout strategy.

"Sunday will be our last day of production. We call upon all our clients to bear with the situation as the sugar factory undergoes urgent maintenance,” he said.

However, most supermarket are not at the moment stocking Mumias Sugar brands.

The CEO, however, confirmed that farmers will continue receiving the usual crop husbandry and related services as normal to boost the productivity of their sugarcane crop.

“I look forward to a stronger partnering over the closure period and upon resumption of milling operations,” he said.

The company in February this year reported a half-year net loss of Sh2.92 billion in the period to December 2016 compared to Sh1.56 billion the previous year.

The Nairobi Securities Exchange-listed miller says it foresees its earnings dropping by more than 25 per cent for the year ending June 2017.

Acute shortage

The troubled firm attributes the losses to an acute shortage of raw materials that led to factory underutilisation, resulting in high unit costs of production.

The volume of sugarcane crushed has dropped by 45 per cent from 581,541 tonnes last year to 319,746 tonnes in the period under review.

Consequently, the quantity of sugar manufactured dropped by 67 per cent in the year ending December to 12,197 tonnes from 36,510 in the previous year.

The firm was also unable to sell electricity to Kenya Power under the power purchase agreement that it has with the utility, further denting the miller's earnings.

The listed sugar company has undergone financial difficulty owing to mismanagement, shortage of sugarcane and cash flow constraints.

The miller has so far received close to Sh3 billion from the government for a turnaround plan to profitability.