advertisement

Companies

Kabras sugar miller opens market share gap over rivals

Workers at West Kenya Sugar Company
Workers at West Kenya Sugar Company factory. FILE PHOTO | NMG 

Embattled sugar miller West Kenya, the processor of Kabras brand, is leading a group of private producers that have overshadowed financially-troubled State-owned corporations in terms of production volumes.

Latest data from the Sugar Directorate indicates West Kenya Sugar Company, produced 53,000 tonnes of sugar in the five months to May 2018, an increase from 40,000 tonnes produced in corresponding period last year.

West Kenya was followed by its bitter rival Butali, which produced 32,765 tonnes and Transmara at 24,851 tonnes.

The firm is currently battling claims of having imported contraband sugar in the country after the State waived duty on imports to cover a sugarcane shortfall caused by drought.

Another private miller Kibos, produced 24,668 tonnes.

Some Sate-owned millers such as Nzoia and Sony sugar outdid a handful of private millers.

Nzoia Sugar Company for instance produced 17,000 tonnes of the commodity in the period under review, with Sony milling 14,817 tonnes of the sweetener outperforming the coastal based Kwale International Sugar Company which did 13,914 tonnes.

Dismal performance

Most of the State-owned companies have been performing dismally for lack of sufficient capital, ageing machinery, mismanagement and political interference.

On the other hand, the private millers have installed new machines that are producing efficiently and optimally and they also enjoy financial muscle.

Mumias, #ticker:MSC majority-owned by the government and for a long time Kenya’s biggest miller, produced only 4,768 tonnes during the period.

The government is selling Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies to strategic investors in order to allow for the injection of new capital and stem their loss making.

The five State-owned millers are steeped in debt amounting to Sh100 billion mainly attributed to mismanagement.

Nzoia Sugar Company owes Sh37 billion, Miwani Sugar Company (in receivership) Sh28 billion, Muhoroni Sugar Company (in receivership) Sh27 billion, Chemelil Sugar Company Sh5 billion and Nyanza Sugar Company Sh3 billion.

Sell 51pc stake

The government plans to sell a 51 percent stake in these companies to strategic investors and reserve another 24 per cent for farmers and employees.

The government will then sell a remaining 25 per cent in the milling companies through an initial public offer once the factories are profitable.

The country faced a sharp decline in production last year forcing the Treasury to remove duty on imports outside the region to ease the shortage curb soaring prices that had hit a high of Sh400 per two-kilo packet.

advertisement