A proposal by the Treasury to merge Chemelil and Muhoroni sugar companies has elicited mixed reactions as the government embarks on a new trajectory to revamp the once vibrant State-owned factories.
A memorandum by the Treasury said that the government is keen to attain viable cane catchment sizes and ensure the sustainability of operations of the ailing companies.
The action plan proposes to have a minimum cane catchment of 29,914 hectares for one factory to break even and play a significant role in supporting the economy and livelihoods of more than eight million Kenyans.
To achieve this, the memorandum proposed merging 18,487 hectares of Chemelil and 22,084 hectares of Muhoroni to achieve 40,571 hectares of nucleus land and ensure efficiency in the supply of the critical raw material for the sweetener.
Despite having 9,143 hectares of land, the report has suggested that Miwani Sugar Company, which went into receivership in 2001 will be leased and operate independently.
Nzoia and Sony sugar companies, which own 49,862 and 31,515 hectares of land, respectively, will also operate separately as the State steps up efforts to revive and commercialise the cash-strapped millers.
The plan has, however, met resistance from stakeholders in the Nyando sugar belt, who argued that the move would compromise management and expose the neighbouring factories to abuse and corruption.
“The government should instead think of replacing the old machinery and embrace modern farming methods to turn around the fortunes of the turbulent industry,” said Muhoroni MP Onyango K’Oyoo.
The legislator who appeared before the National Assembly’s joint Committee on Finance and the National Planning and Agriculture and Livestock Committee maintained that the firms should be independent.
Miwani MCA Geoffrey Warindu said the proposed merger is of no consequence when more than 70,000 acres of land continue to lie fallow.
“We are concerned that thousands of people will lose their jobs while a single entity could exploit farmers by setting lower prices of canes,” he said during the session held in Kisumu.
Finance and Planning Committee chairperson Kimani Kuria said stakeholders have a week to deliberate on the report before it is presented to the National Assembly next Wednesday.
The report indicates that the five public sugar companies have long-standing loans and payables totalling Sh128 billion.
Nzoia Sugar has a liability of Sh62.6 billion, Muhoroni at Sh26.2 billion, Miwani (Sh22 billion), Chemelil (Sh9.9 billion), and Sony at Sh7.2 billion.
Agriculture and Livestock Committee chair John Mutunga noted that the National Assembly will consider writing off Sh65.7 billion loans issued by the defunct Kenya Sugar Board to the public sugar companies.
“Parliament will also deliberate on waiving taxes, penalties, and interest estimated at Sh50.1 billion as at June 30, 2023,” he said.
The report indicated that the five sugar mills have accumulated staff salary arrears of Sh5.2 billion, and a similar amount owed to creditors, including contributions to NSSF, NHIF, cooperatives, and social welfare deductions.
