Sale of sugar millers stalls on Sh3.5bn workers claim

The five State millers set for privatisation owe workers Sh3.5 billion in back salaries and statutory deduction, prompting the employees to stall their privatisation.

The Kenya Union of Sugar Plantation & Allied Workers (KUSPAW) says Chemelil Sugar Factory, Sony Sugar Factory, Miwani Sugar Factory, Muhoroni Sugar Factory and Nzoia Sugar Factory owe its 3,500 members the billions in salary arrears.

The union said the government had advertised tenders in July this year for private companies to take over the millers without consulting them or indicating how they would get their dues.

They said the government has failed to disclose details of the deal including how they intend to settle this debt and the legal frame work governing the restructuring of the sugar factories.

“That in the said advertisement the interest and concerns of the petitioner herein were not addressed despite the said factories owing the members of the petitioner salaries and unremitted statutory deductions amounting to over shillings three and half billion,” KUSPAW said in court documents.

The sugar workers want the court to declare that the sale of the state-owned millers did not follow public participation, and declare the advertisement null and void.

This would halt attempts by companies such as two firms associated with Mr Jaswant Rai, of West Kenya Sugar Company and Sukari Industries to take over the crowns of the western sugar belt.

Other companies interested in the sugar milers include Mehta Group, Kibos Sugar, Butali Sugar Mills, Mini Bakeries and Kuguru Food Complex, China CAMC Engineering Company Limited and Shenzhen Start Instruments.

The Agriculture and Food Authority tried to dismiss the workers’ case on technicalities claiming the court lacks jurisdiction over the matter and that the sugar workers are not in government employment thus should not be brought to an employment court.

Justice Mathews Nduma however said that the matter is correctly directed at the Attorney General and that failure to include specific sugar companies cannot void the case.

“The petitioner may have opted to join specific sugar companies as respondents also but it is the finding of the court that such non-joinder is not fatal to this case and does not impact the jurisdiction of the court to hear and determine this particular dispute,” Justice Nduma said.

For over one and a half decades, Kenya has been unable to privatise the five ailing sugar millers a process that has been hampered by court cases and legacy debt.

The government had promised to waive Sh62 billion debts that are choking the industry, to unlock the deadlock.

There have been several false attempts at brokering talks between counties and the national government to abandon litigation and find solutions to privatize the five sate millers before the industry faces competition from cheap sugar imports in the Common Market for Eastern and Southern Africa (Comesa) region.

The late Henry Obwocha former Cabinet minister and West Mugirango MP who served as the chairman of privatization commission during these attempts had said Members of Parliament from the sugar belt are apprehensive that the community land will go to private hands.

At the centre of the dispute is the 41,411.47 acres of land which is equivalent of 31,372 football fields where the companies own extensive tracts.

Chemelil has 6,868 acres, Nzoia has 11,438 acres, South Nyanza has 7,407 acres while Muhorini has 6,866 acres. Miwani has 8,831 acres.

Opposition leader Raila Odinga’s capitulation to the government helped pave way for a deal which saw government advertise to lease the millers.

KUSPAW moved to court to halt the process prompting Mr Odinga to declare the court ruling as a threat to development, coming at a time the government was working to stabilise the economy.

Although there was indication that the union had been pressured to withdraw the case, the process is still on for full hearing.