Chemelil Sugar posts Sh821m loss

Edward Ouko
Auditor-General Edward Ouko. FILE PHOTO | NMG 

Chemelil Sugar Company has fallen deeper into the red, with Auditor-General Edward Ouko saying in a fresh report that it remains technically insolvent and its continued operation depends on financial support from the government and its creditors.

The State-owned company posted a loss of Sh821.0 million in the year to June 2018, resulting in accumulated losses of Sh6.05 billion.

The miller’s current liabilities of Sh3.08 billion exceed current assets of Sh545.8 million.

“The company is therefore technically insolvent and its continued operation as a going concern therefore dependent upon financial support from the national government and its creditors,” said Mr Ouko in a report tabled in Parliament.

The Auditor-General had last year revealed that the firm incurred a loss of Sh767.25 million in the 2015/16 financial year, and a 640 million loss in 2014/15.


In the latest report, he questioned Chemelil’s adherence to budgetary rules saying this could hit the miller negatively.

“In view of the foregoing, the company does not adhere to the budgeting principles and this is likely to have a negative impact on the final performance of the company’s activities,” said Mr Ouko.

In the year under review, the company planned to spend Sh4.3 billion but only spent Sh1.42 billion.

His remarks come barely a year after revelations that the company misappropriated Sh248 million loan advanced by the Sugar Directorate and spending on non-authorised vote heads.

The directorate in the financial year 2015/16 advanced the facility to Chemelil out of a total Sh265 million budgeted for annual maintenance.

The management of Chemelil has also been accused of engaging in irregular export of sugar between March and May 2008.

The company sold 118,144 units of 50 kg bags of sugar valued at Sh256.4 million that was meant for export to South Sudan to three local companies.

“No satisfactory explanation has been provided by the company on how sugar meant for export ended up in the local market,” he said.

The Ethics and Anti-Corruption Commission has since taken up the matter for investigations.