Mauritian firm freezes plans to add stake in Kwale sugar miller

Kiscol factory. Omnicane was to buy an extra 25 per cent equity in the sugar miller. PHOTO | LABAN WALLOGA
Kiscol factory. Omnicane was to buy an extra 25 per cent equity in the sugar miller. PHOTO | LABAN WALLOGA 

Mauritian firm Omnicane has frozen plans to double its stake in a Kwale-based sugar factory, opting to set up new sugar mills in Mozambique and Ghana.

Omnicane, which currently holds a 25 per cent stake at Kwale International Sugar Company Ltd (Kiscol), has declined to exercise an option which allowed the Mauritian group to take a further 25 per cent shareholding in the Kenyan firm.

The Port Louis-based sugar miller has also delayed the decision as it explores the viability of exploiting cane by-products such as setting up a distillery and yeast plant.

The $200 million (Sh20 billion) Kiscol joint venture is 75 per cent held by a family-owned investment company Pabari Investments from whom Omnicane was to buy the extra 25 per cent equity that would have made them equal partners.

“Omnicane and Pabari Group want to invest in a greenfield sugar factory in Mozambique and set up a refined sugar factory in Ghana where there is no sugar factory,” said Harshil Kotecha, director of projects at Kiscol.

“We are also pursuing other options like distillery, yeast plant and others so depending on the feasibility outcomes, we’d rather assess to move into new projects with different shareholding and not shake the current structure,” Mr Kotecha told the Business Daily in an interview.

Omnicane, listed on the Stock Exchange of Mauritius, was scheduled to expand its shareholding at the $200 million Ramisi sugar factory one year after the company began operations. Kiscol began crushing cane in February 2015.

The Kiscol factory has a capacity to mill 3,000 tonnes of cane per day, an 18 megawatt bagasse-fired power plant and an ethanol plant with a capacity to produce 50,000 litres per day.

The sugar miller last October signed a power purchase agreement with Kenya Power to sell 14MW of biomass generated electricity at a tariff of ¢10 per kWh.

Mr Kotecha said exports to the grid will formally begin by June, with the sugar firm using 4MW for factory operations.

Mumias Sugar switched on its 38 megawatts co-generation plant in May 2009.

The loss-making miller internally consumes 12MW to run factory operations and sale of 26MW of electricity to the national grid was halted in December 2014 due to disagreements with Kenya Power.

Kiscol is Kenya’s 12th sugar miller in an industry dominated by loss-making and debt-laden State-owned sugar firms such as Mumias, Nzoia, Sony, Muhoroni and Chemilil.

The private players in the sugar industry include West Kenya, Sony, Kibos, Butali, Transmara and Sukari Industries.