Economy

Billionaire Rai bids for five State-owned sugar firms

rai

Tycoon Jaswant Rai. FILE PHOTO | NMG

geraldandae

Summary

  • Billionaire Rai family is among investors eyeing lease deals for the five State-owned sugar factories.
  • The Agriculture ministry said it had received bids from 29 companies interested in running Chemelil, South Nyanza, Nzoia, Miwani and Muhoroni sugar mills on lease terms as part of reforms aimed at reviving the ailing sector.
  • The list of bidders includes two firms linked to tycoon Jaswant Rai -- West Kenya Sugar Company and Sukari Industries.

Billionaire Rai family is among investors eyeing lease deals for the five State-owned sugar factories.

The Agriculture ministry said it had received bids from 29 companies interested in running Chemelil, South Nyanza, Nzoia, Miwani and Muhoroni sugar mills on lease terms as part of reforms aimed at reviving the ailing sector.

The list of bidders includes two firms linked to tycoon Jaswant Rai -- West Kenya Sugar Company and Sukari Industries.

Others are China CAMC Engineering Company Limited, Shenzhen Start Instruments, Mheta Group, Kiboss Sugar, Butali Sugar Mills , Mini Bakeries and Kuguru Food Complex.

“The next stage that will follow will be evaluation of the bids after which those ones that will qualify will be asked to present their proposal from which we shall pick the winners,” Benjamin Tito, chairperson of the tendering committee, said on Tuesday.

A successful bid by two firms linked to the Rai family would see it further consolidate its grip on the sugar market.

Data by the Sugar Directorate showed that over the six months to June, the three firms owned by the Rai family — West Kenya, Sukari Industries and Olepito Sugar — controlled 45 per cent of the total sales of the commodity in the country, a rise from the 41 per cent market share they held in the corresponding period last year.

West Kenya had the lion’s share at 29 per cent followed by Sukari Industries at 11 per cent. Olepito came in at a distant third with two per cent of the total 292,040 tonnes sales reported between January and June.

The government is banking on capital injection by private investors to revive the country’s sugar industry, long crippled by poor funding, ageing machinery and an overall high cost of production.

“We want to attract and finally secure only those investors we think serious and worthy enough to partner the government in the revival of the sugar industry in Kenya,” Agriculture Cabinet Secretary Peter Munya said.

On July 2, the Agriculture ministry announced a raft of measures the government was putting in place to revive the sugar sector. They included writing off debts of State-owned mills and out-grower institutions, stopping the importation of brown sugar and privatisation of the factories through a long-term lease model of at least 20 years.

Mr Munya said county governors from the sugar producing zones fully backed the factory lease plans which are expected to restore competitiveness.

“Through comprehensive reforms, the government is determined to facilitate a multi-purpose sugarcane industry that is efficient, diversified and globally competitive,” he said.

Kakamega Governor Wycliffe Oparanya and his Kisumu counterpart, Anyang’ Nyong’o, last month said the leases would boost sugar production and increase income for farmers.

“The leasing of sugar mills will inject fresh investments in the mills, leading to higher productivity and subsequent employment of more workers and steady farm gate prices to the farmers.

“This will no doubt guarantee tremendous increase in sugar production for both local and export markets,” said the two governors.

The governors, speaking for their Lake Region Economic Bloc, also lauded the move to write off some Sh62 billion that these millers owe the State.

The governors previously opposed the sale of the millers to investors and successfully obtained a court injunction blocking them same. The last attempt to privatise the five companies was in 2015 failed after a court case challenged the manner in which the Privatization Commission planned to do it.

The case prompted the Privatisation Commission to restart the process and involve more parties, including county governments in the region.

Two of the millers are in receivership.

Kenya relies on duty-free imports from the Common Market for Eastern and Southern Africa trade bloc to cover its annual deficit largely caused by inefficiency in the State-run factories.