MPs approve sale of 51pc stake in millers

The sale of 51 per cent stake in five sugar millers to strategic investors has received approval from a parliamentary committee, paving the way for the privatisation commission to start the auction process.

The House Committee on Finance, Trade and Planning on Tuesday backed the Cabinet’s recommendations to sell the non-performing millers.

“Having considered the privatisation proposals and having listened to the Cabinet secretary, National Treasury, the committee recommends that the House approves the privatisation proposals for the public sector owned or controlled sugar companies,” the committee noted in reports tabled in Parliament on Tuesday.

“It is only through privatisation that the sugar sector can be revitalised. This is true considering that the Comesa safeguards are lapsing in February 2015 and that Parliament had already approved write off of excess debt of Sh33.78 billion owed by the public sector-owned companies.”

The sale of Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies is part of reforms aimed at making Kenya’s sugar industry competitive.

The government plans to sell a 51 per cent stake in the five sugar companies to strategic investors and reserve another 30 per cent for farmers.

READ: Five State-owned sugar firms to go on sale

The State will then sell a remaining 19 per cent stake in the milling companies through an initial public offering once the factories are profitable.
Nzoia and Sony, which have a cane growing area of 49,862 hectares and 31,415 hectares respectively, will be sold as they are.
Chemilil and Muhoroni will be merged to form one company with a cane growing area of 40,571 hectares.
“The decisions on Miwani Sugar Company to be made once ongoing court cases are determined,” the Cabinet said in October while seeking Parliament’s nod for the sale.
Kenya is expected to fully open up its market to imports from the regional Common Market for Eastern and Southern Africa (Comesa) states after more than a decade of an arrangement that allowed it to charge high tariffs to protect its sugar farmers.
Kenya in February was granted a one-year extension of safeguards that limit sugar imports from Comesa to allow the country improve the competitiveness of its sugar industry.
The tariffs were scheduled to fall to zero in March, but Kenya sought an extension until 2015 to conclude reforms in its sugar industry.