Kenya puts up five sugar millers for 20-year lease

The Kenya government has started the process of leasing five public sugar factories to private companies that will run the millers for 20 years in a fresh revival plan.

The Ministry of Agriculture and Crops Development has put up Nzoia, South Nyanza (Sony), Chemelil, Muhoroni and Miwani sugar companies for the lease.

The government owns a 98.8 percent stake in Sony, 97.93 percent in Nzoia, 96.22 percent in Chemelil through the Agricultural Development Corporation (ADC) and 1.42 percent through the Development Bank of Kenya (DBK). It also owns 82.8 percent stake in Muhoroni and 49 percent in Miwani.

“These sugar factories have a combined potential of 30 percent of the sugar market share in Kenya in a market currently standing at 1 million tonnes per annum,” said the Ministry in a Tuesday notice.

Successful bidders will control factories, office buildings, machinery, equipment, nucleus farms, staff and guest houses, schools, sports stadia and service contractor yards owned by the millers.

Most of the public sugar factories are old and use dilapidated equipment as well as machinery due to insufficient upgrades or maintenance which means that most operate below their capacity.

The government is targeting to woo private companies to inject fresh capital into the struggling millers, to not only grow their sugar processing capacities but also maximise on diversification.

This comes months after the Cabinet approved the waiver of debt including taxes, interest and penalties owed by public sugar millers to a tune of Sh117 billion to pave the way for the leasing.

“The objective is to facilitate turnaround of these sugar companies to profitability after modernisation and efficient management without bureaucratic encumbrances to enhance competitiveness in the EAC, Comesa and world sugar markets,” said the ministry.