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Companies

Chemelil Sugar wants additional Sh500 mn bailout

The Chemelil Sugar Company factory. FILE Photo | Tonny Omondi | NMG
The Chemelil Sugar Company factory. FILE Photo | Tonny Omondi | NMG 

Cash-strapped Chemelil Sugar Company wants the State to cough up an additional Sh500 million for factory maintenance to enable its return to normal operations.

Managing Director Gabriel Nyangweso said the company’s crushing capacity has largely been hampered due to worn out yet critical machine parts.

“The last time we managed to conduct a comprehensive maintenance was in 2013 when we used half a billion,” he said today, adding that only Sh248 million was used to finance the exercise last year.

Mr Nyangweso said that a properly maintained factory should be able to operate for at least 300 days in a year.

“We partially resumed operations on September 22 this year and only crush 2,500 tonnes a day, against the expected output of 3,000 tonnes.”

He was speaking at his office Thursday after receiving a Sh300 million bailout cheque from the national government to pay farmers’ arrears accrued between 2014 and June 2017.

The money, which was delivered by Agriculture Cabinet Secretary Willy Bett, is scheduled to offset debts to over 9,000 cane growers and encourage them to embark on massive production of the commodity.

Insolvent

The request by the miller comes just months after Auditor-General Edward Ouko declared it technically insolvent, saying that its operations relied solely on financial support from the government.

The company recorded a Sh767.5 million loss loss up from Sh640 million in 2014/15, with current liabilities having exceeded the firm's current assets by Sh1.7 billion as at end of June 2016.

“Evidently, the company is technically insolvent and its continued operation as a going concern is, therefore, dependent on financial support from the government, trade payables and its bankers,” Mr Ouko said in an opinion dated April 10.

Mr Nyangweso says the firm also needs 17,000 hectares for cane development in order to get back on track amid the current cane shortage.

Additional reporting by Lynette Mukami

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