Mumias Sugar seeking Sh2bn more in bailout

Ailing Mumias Sugar has put out another request to the National Treasury for funding, a day after resuming ethanol production.

The Mumias Sugar Company. FILE PHOTO | NMG 

IN SUMMARY

  • Mumias Sugar board chairman Kennedy Ngumbau Mulwa said the firm was seeking Sh2 billion in order to kickstart operations.
  • The troubled firm is relying on electricity from diesel generators after Kenya Power disconnected supply over a Sh2 billion debt.
  • The government owns a 20 per cent stake in the firm and has previously bailed it out to the tune of Sh3.5 billion.

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Ailing Mumias Sugar has put out another request to the National Treasury for funding, a day after resuming ethanol production.

Board chairman Kennedy Ngumbau Mulwa said the firm was seeking Sh2 billion in order to kickstart operations.

“We have put in place a viable plan that will put the miller back on track if the money we are expecting from the national Treasury is released,” Mr Mulwa said on Tuesday.

The troubled firm is relying on electricity from diesel generators after Kenya Power #ticker:KPLC disconnected supply over a Sh2 billion debt.

While requesting for additional funds, the sugar company said it had presented a turnaround plan to the Treasury for approval as it awaits a way forward on the matter. “Despite the financial challenges we are facing, the management team has done everything possible to start ethanol production as we make preparations to resume milling when our position improves,” Mr Mulwa told the Business Daily.

The government owns a 20 per cent stake in the firm and has previously bailed it out to the tune of Sh3.5 billion.

However, the funds have led to little improvement in its earnings and capital position. The firm said farmers had agreed to deliver cane. Mumias East MP Benjamin Washiali said efforts by the management to start ethanol production should be supported.

“It is unfortunate that we have had instability in the management of the company which has delayed plans to release funds to the miller,” said Mr Washiali. The miller plans to pay farmers an outstanding Sh700 million for cane deliveries. They will be paid after delivering cane to the factory. The company also said it will source cane from as far as Kisumu County, signaling intensified turf wars for the raw material.

“In view of this, the board and management have put in place a number of initiatives to deal with factory efficiency and cane availability,” Mr Mulwa said.

The firm said it had adequate supplies of molasses obtained from neighbouring Butali and Nzoia millers to sustain ethanol production. Earlier, plans to restart milling stalled after transporters declined to ferry cane from farms citing the high cost of fuel.

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