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Counties get nod to set up sugar factories

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Tractors deliver cane at a sugar factory in western Kenya. file photo | nmg.

You are free to establish your own sugar factories instead of waiting for State-owned millers to be sold. That is the message the Council of Governors and the government have given leaders in cane growing zones.

At the same time, it appears that the factories will not be disposed of at a go as sugar firms that are ready to go ahead with the privatisation have been asked to proceed while those not yet have been given time to deal with challenges they are facing.

Mr Zachary Obado, CoG Agriculture Committee chairman said counties are free to set up mills in areas where the raw material is available but there is no factory.

“It does not need to be a private investor, so long as Kisumu has the capacity to purchase the equipment that will serve the interest of farmers then they should do it,” said Mr Obado.

He spoke on the sidelines of a conference in Kisumu bringing together stakeholders in the industry.

The Migori governor said if counties establish their own factories, it will complement the revenue they get from the government.

He, however, warned cane growing counties against establishing new factories in zones where there are existing facilities as competition for raw materials has been unhealthy especially in western Kenya.

He added: “Our centre of interest is the farmer. If the process we are initiating has some disadvantages to the farmer then those are the things we want rectified before we move on,” said the county boss.

Politicians and other stakeholders have been angered by the long period the privatisation has taken.

Nandi Governor Stephen Sang said things were not moving fast enough and resolutions made were not being implemented.

“It is high time we get things going or we find other options in reviving the sugar sector other than privatisation,” said Mr Sang.

Kisumu Deputy Governor Mathews Owili said there was need for counties from the lake region economic bloc to come up with a position that will benefit their people.

Kisumu Senator Fred Outa said: “We will use well-wishers to revive our factories should the national government fail to manage their privatisation.”

The governors’ move was supported by the investment secretary at the National Treasury Esther Koimet. She said counties should not wait for a strategic investor for them to continue with the sale.

“Nothing stops the private sector within counties from coming together and taking up running of sugar factories,” she said, adding that the history of some millers such as Mumias should not dampen the spirits of many.

READ: Farmers protest move to reduce sugarcane price

Agriculture CS Mwangi Kiunjuri confirmed that a Cabinet memo seeking approval of writing off the Sh89.3 billion debts owed by sugar factories has been prepared and that his ministry is set to gazette sugar regulation by 31st March this year to ensure the process privatisation undertaken smoothly.

The debts per factory stand at Nzoia (Sh38.86bn), Muhoroni (Sh9.46bn), Miwani (Sh5.8bn), and Chemelil (3.38bn) while Sony stands at (Sh1.8bn). Tax arrears stand at Sh23bn.

The National Lands Commission is expected to conduct title deed searches for each sugar company.

During the stake holder’s forum, the privatisation commission was tasked to conduct a factory by factory consultative process within the next two weeks starting with Chemelil Sugar company and Muhoroni.

The team will then visit Miwani, Sony Sugar on Monday and Nzoia on March 20 to establish their challenges.

The commission is then expected to submit a report to the next high level consultative meeting to be held within the next three weeks.

The stakeholders also resolved that the process of identifying strategic partners in respect of the sale of 51 per cent shareholding in each public sector owned Sugar Company will be as prescribed in relevant legislation.