An Indian multinational will establish a Sh5 billion sugar complex in South Mugirango, Kisii County.
Governor James Ongwae and Kanoria Group’s chief finance officer Vinod Vora signed a Memorandum of Understanding (MoU) at the Agricultural Training Centre in Kisii town.
The pact is part of the Sh21 billion worth of investments pledged by investors during the just concluded Kisii Entrepreneurship Summit.
When fully operational, the factory will be the second largest in Kenya after Mumias Sugar.
The project, expected to commence in July will see the Kanoria build a sugar mill with a capacity to crush 5,000 tonnes of cane per day and produce 172,500 metric tonnes of sugar.
The sugar complex will also produce 15 million litres of ethanol and 10 megawatts of power.
“This is a major breakthrough in the agriculture sector of our economy. The establishment of this sugar complex will improve residents’ livelihoods in South Mugirango and the county as a whole. It will create 1,000 direct jobs and 2,500 indirect jobs for our people,” Mr Ongwae said.
He promised to cooperate with the firm in ensuring that cane farming becomes a successful economic venture.
“We shall work closely with the investor to support sugar cane farming in Kisii County,” said Mr Ongwae.
According to the MoU, the Kisii county will avail land for the project on a lease agreement.
The complex is expected to serve farmers in South Mogirango, Bomachoge Chache, Bonchari, Bomachoge Borabu and Bobasi sub counties.
Asiatic Oxygen will also establish a smallholder out grower support scheme and build social infrastructure consisting of a school, dispensary and recreational facilities in the area.
Kanoria’s Mr Vora underscored his firm’s commitment to the expansion of cane farming in the county.
“We are dedicated to the objective of improving cane growing through this investment so that we can have adequate volumes by the time construction work is complete in 2018,” said Vora.
He explained that the bulk of the sugar and ethanol will be sold within the country and that the surplus power sold to power utilities.
“This is the second project the Kanoria Group is establishing outside of India, the first being in Ethiopia. We chose to invest in Kisii because of the favourable agri-climatic conditions and the county’s commitment to improve the investment climate. Other considerations include availability of land and other concessions,” he added.
The firm is in the process of completing a feasibility study to assess the technical and environmental aspects of the project.
It is also in the process of confirming the project’s viability in terms of environmental conditions, transport and transmission logistics.
Currently, Kisii produces slightly over 1.8 million metric tonnes of cane per year. The cane is transported over long distances to factories at Sony, Sukari and Transmara.
The new sugar complex will address a number of challenges facing cane farmers in Kisii including delays in harvesting, high transport costs and lack of extension services, training and inputs.
Kanoria Group is one of the oldest and most respected business families in India with companies spread across India.
The firm ventured into manufacturing in the 1950s by setting up new companies and acquiring existing businesses.
It owns and operates companies engaged in the production of cement, sugar, pharmaceuticals, tea, jute products, textiles, chemicals, packaging and roofing materials.