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MPs approve Sh11bn plan to revive Miwani
Derelict buildings at Miwani Sugar Company. File
The revival of Miwani Sugar Company in Western Kenya inched a step closer on Friday after a committee of Parliament approved a Sh11 billion investment plan by South Africa-based Eaglefin Structured Finance Mauritius Limited.
The company’s proposal to give 51 per cent of the revived sugar firm’s shares to cane farmers and out-grower societies got the nod of the Agriculture, Livestock and Co-operatives committee.
“We can confirm that we will be able to accommodate out-grower community at 51 per cent shareholding,” said Helgaard Muller, a director of Eaglefin.
However this would require the government to underwrite the farmer’s participation through promissory notes that would help the company raise funds externally.
The Sugar (Amendment) Act stipulates that cane farmers and out-growers hold 51 per cent stake in all sugar companies which are set to be privatised. The firm also wants to be allocated extra land for either purchase or on a long term lease of at least 60 years.
The government is undertaking privatisation of State-run sugar millers including Muhoroni and Chemelil to raise efficiency ahead of the lapse of Comesa safeguard rules which restrict sugar imports.
In Eaglefin’s plan sugar farmers would not pay directly for the shareholding but would have their dividends used to pay the financiers over a 10- year period.
The model aims to replicate that in the tea and coffee sectors where growers are allocated shares in new ventures and part of the proceeds used to clear their obligations.
In the Miwani case, however, farmers would get full payment for cane deliveries during the term of the loan, foregoing dividends until the debt is fully settled.
Mr Muller said the company would put in place a private insurance that would guarantee the government and external funders of the discharge of the promisory notes and payment respectively.
“We have engaged the South African government for an export credit issuance scheme. They will provide commercial underwritings for us as minority shareholders of 49 per cent stake to secure 100 per cent external funding from a senior lender,” he said.
The firm said it had made a commitment to its technology suppliers and entered into fixed contracts to start the construction of the new factory as soon as government approval is granted.
“We are impressed with the plan and especially the modern technology that will be employed in the sugar production,” committee chairman John Mututho said.
