Counties

Mumias resumes ethanol production after 2 months

mumias

Entrance to Muias Sugar Company. FILE PHOTO | NMG

geraldandae

Summary

  • The miller has been relying on ethanol, which is now the main revenue stream, after milling of sugar stalled over two years ago as farmers stopped supplying the factory with sugarcane due to non-payment.
  • The miller is now doing close to 150,000 litres of ethanol in the two shifts, coming as a boost to the miller that has been struggling financially over the years.
  • The resumption comes at a time when there is high demand of alcohol for production of hand sanitiser due to Covid-19.

Mumias Sugar Company #ticker:MSC has resumed ethanol production after a factory shutdown for nearly two months following a shortage of molasses.

The miller has been relying on ethanol, which is now the main revenue stream, after milling of sugar stalled over two years ago as farmers stopped supplying the factory with sugarcane due to non-payment.

The miller is now doing close to 150,000 litres of ethanol in the two shifts, coming as a boost to the miller that has been struggling financially over the years.

The resumption comes at a time when there is high demand of alcohol for production of hand sanitiser due to Covid-19.

“We have resumed production after outsourcing molasses from Nzoia and Butali after experiencing a shortage of this raw material a while back,” said an official from Mumias.

The firm requires half a billion shillings to get back into milling of cane, the funds are to be used in buying of the spare parts that have worn out.

The struggling miller was placed under administration after it defaulted on loans amounting to Sh545 million owed to KCB, which successfully pushed the process through the courts.

Mumias, majority-owned by the government and for a long time Kenya’s largest miller, has been in financial trouble even after the government pumped in about Sh3 billion.

Mumias’ loans stood at Sh12.5 billion at the end of June 2018. It owed Ecobank Kenya Sh2 billion, French development finance institution Proparco Sh1.9 billion and Commercial Bank of Africa Sh401 million.

Other creditors are the Treasury (Sh3.1 billion) and Kenya Sugar Board (Sh1.6 billion). Mumias was also operating on bank overdrafts worth Sh2.7 billion from various lenders.

Efforts by the government, which is the single largest shareholder, to bailout the firm has proved to be unsuccessful.

Mumias Sugar Company sunk into insolvency to the tune of Sh6 billion after making further losses that saw its total liabilities surpass the total assets in the year ending June 2018.