Part of the plan in place by the miller is to pay farmers the outstanding Sh700 million for cane deliveries after resuming operations.
Thereafter, farmers will be paid after delivering their cane to the factory.
The company also says it will fetch as far as Kisumu county for cane, signalling another battle for raw material
Ailing Mumias Sugar Company #ticker:MSC has sent out yet another plea to the National Treasury for funding, even as it says it will seek more cane from other areas to sustain operations.
The company’s senior management and the board met on Tuesday and resolved that the Sh2 billion they have requested from the National Treasury will be key in restarting the firm’s operations.
Part of the plan in place by the miller is to pay farmers the outstanding Sh700 million for cane deliveries after resuming operations.
Thereafter, farmers will be paid after delivering their cane to the factory.
But the company also says it will fetch as far as Kisumu county for cane, signalling another battle for raw material, whose shortage has crippled State-owned millers.
“In view of this, the Board and Management have put in place a number of initiatives to deal primarily with two issues, touching on factory efficiency and cane availability,” Mumias Board Chairman Kennedy Ngumbau Mulwa said in a statement last evening.
The chairman spoke after meeting with senior management officials at the factory in Mumias on Tuesday to discuss final preparations and assess availability of cane before resuming milling.
The team of directors and senior management officials later visited some farms in Koru and Muhoroni in Kisumu, in what they said was to map out areas of possible cane supplies, which will be a key input for its turnaround plan.
But all these will depend on disbursement of funds from the National Treasury.
“We have so far managed to fulfil 80 per cent of the conditions set in place by the government and the good news is that the restructuring plan has been approved.
"We expect the national treasury to release the funds anytime to enable us restart normal operations,” said Mr Mulwa.
Mr Mulwa was upbeat about the progress of made by the management to implement the restructuring plan for the revival of the miller.
Officials met to discuss challenges associated with shortage of cane and sustainability of economical factory operations.
“During the recently concluded high level consultations for Sugar Development on June 28-29th,2018 between officials of the national government and those from County Government of Kakamega, one of the resolutions made was for the National Government and the County Government of Kakamega to assist in the turnaround of the Company.
“In the next two days, the team plans to visit other farms in Kitale and Siaya. The visits so far have been a great experience with emerging possibility of forging partnerships to support the company’s revival plan,” said Mr Mulwa.
The proposed changes include sealing of loopholes to ensure funds released to the miller are not diverted to other use by management officials.
“We want to work closely with farmers by ensuring they are paid for cane as soon as they deliver it to the factory to win back their confidence,” said Mr Mulwa.
Halted operations
The miller halted operations four months ago due to a shortage of cane.
The government asked the miller to restructure operations and reduce its employees from 1,400 to 700 workers before additional funds could be released.
The management was working with local leaders and farmers to finalise preparations on the 20 per cent of the restructuring plan.
Last week, Mr Mulwa said the company had approached farmers from outside Kakamega for additional supply of cane.
“We are having a board meeting to discuss a range of issues and top on our agenda is the plan to restart milling at the factory. We are upbeat everything is proceeding according to plan,” he said.
Mumias Sugar is looking for an additional Sh1 billion Treasury bailout to pay farmers and clear other outstanding debts. The miller owes cane farmers an estimated Sh700 million.
“The supply of mature cane could last for close to six months as the miller engages farmers to improve cane development in the miller’s catchment,” said Mr Ngumbau.
Proposed retrenchment
In May, the government proposed retrenchment as a condition for releasing additional funds to the ailing miller.
Sports secretary Rashid Echesa said the government would peg further support for the miller on substantive plans to reduce its wage bill.
He said the State had offered another Sh1 billion to cater for the retrenchment and Sh1 billion to pay farmers.
“I led a team of management and board members of Mumias Sugar to the office of the deputy president and we agreed that they have to reduce employee numbers,” he said.
“The miller needs to identify employees who will be laid off and retain the most competent and skilled ones for effective service delivery.”
However, he warned that the money would only be released if the miller presents a concrete proposal on job cuts.
Mr Echesa urged the miller to reduce the number of its employees, which currently stands at 1,400, to 600.
According to the minister, the bloated workforce costs the cash-strapped factory Sh90 million a month in salaries.
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