Mumias Sugar needs over Sh5bn to stay afloat

Many machines at the Mumias Sugar factory are idle due to lack of adequate cane. FILE PHOTO | NMG
Many machines at the Mumias Sugar factory are idle due to lack of adequate cane. FILE PHOTO | NMG 

Mumias Sugar Company #ticker:MSC needs more than Sh5.1 billion to resume full operations, managing director Nashon Aseka has disclosed.

Mr Aseka, who assumed office on Friday, said the company had many challenges which require the support of all stakeholders. He said his priority would be to ensure that farmers are well taken care, and to resolve cane poaching. 

The MD disclosed that many machines at the factory were idle due to lack of adequate cane. He blamed this on mismanagement by former managers.

“I have worked here before for 24 years as the factory manager. Many problems have emerged among workers and farmers,” he said.

Mr Aseka is the fourth managing director at Mumias since the exit of Dr Evans Kidero in 2012 to contest for the Nairobi governor seat. Dr Kidero was succeeded by finance manager Peter Kebati, who paved the way for Mr Coutts Otolo. The board then replaced Mr Otolo with immediate former MD Erroll Johnson.

Mr Aseka, who was introduced to workers by board chairman Kennedy Ngumbau, said plans were underway to restructure the company so as to reduce its wage bill. “We might be forced to retrench workers in some sections as we will lease out some facilities that are less productive,” he said.

Mr Aseka and Mr Ngumbau said they would lease out hostels, a golf course, water production plant and an airstrip.

A myriad of issues has conspired to push the company’s cash position into the red, among them sugar cane poaching, cheap sugar imports, and mismanagement.

The company, the only listed one among the country’s 11 millers, has been facing one of its toughest financial times since its inception four decades ago.

The company temporarily suspended operations in April to enable it to undertake routine repairs and maintenance.

Recently, a farmers lobby said failure by the outgoing CEO to clear over Sh700 million arrears owed for cane deliveries had made many farmers uproot the crop.

Kenya National Federation of Sugarcane farmers Deputy Secretary Simon Wesechere said the current acreage cannot sustain the factory for three months in a row.

In February, the company reported a half-year net loss of Sh2.92 billion in the period between December, compared to Sh1.56 billion the previous year.

The miller has in the past two years received Sh3.1 billion from the Treasury to steer it back to profitability.