New Kenya Cooperative Creameries (New KCC) has stopped supplying milk to retail chain Tuskys Supermarket over non-payment on deliveries running into millions of shillings.
New KCC cited high debt on the account of the retailer for halting their supplies of all types of milk to Tuskys.
Tuskys has seen some delays in payments to suppliers, attributing it to low business as a result of the Covid-19 pandemic, prompting the Competition Authority of Kenya (CAK) to intervene.
The milk firm stopped the supplies after the company exceeded its credit payment period of 60 days.
New KCC managing director Nixon Sigey said they are in negotiations with the retailer in order to agree on the terms of resumptions in supplies.
“We are at the moment in discussion with the firm to agree the way forward after we stopped supplies of milk to the retailer,” said Mr Sigey.
Mr Sigey did not disclose the amount of debt owed to New KCC, but said the milk processor has monthly business worth Sh80 million with the retailer.
New KCC is one of the companies that suffered financial losses after Nakumatt went down with Sh18 billion that was owed to suppliers.
Other suppliers who spoke to the Business Daily said they are cautiously supplying the retailer with their goods because of the delays in payment, which has hurt their financial flow.
“We are still supplying to them (Tuskys) but we have cut down on quantities to avoid huge debts at the end of the day given their slow pace of payment,” said a managing director of a flour company, who requested anonymity.
Manufacturers have already requested the government to urgently intervene and oversee the payment of money owed to Tuskys supermarkets’ suppliers to avoid a full-blown debt crisis.
The competition watchdog on Monday ordered Tuskys to settle the Sh1.29 billion owed to suppliers by between July 1 and July 16.
Tuskys becomes the first major retailer to face the scrutiny of CAK’s Buyer Power Department that was created after Nakumatt Holdings collapsed with Sh30 billion owed to suppliers.