Govt completes leasing process of 4 sugar factories
The government has completed the leasing process of four public sugar factories to revive the once-thriving sugar sector in the country.
The Cabinet Secretary for Agriculture and Livestock Development, Mutahi Kagwe, has said that following a broad-based consultation, four private millers have been awarded a 30-year lease for the operation of Nzoia, Chemilil, Sony and Muhoroni Sugar Companies.
“The procurement of the four firms followed broad-based engagement with stakeholders across the sugar sector dating back to the year 2015 when Parliament approved the process,” he said.
In a press statement, the CS said leasing of Nzoia Sugar Company has been awarded to West Kenya Sugar Company, while that of Chemilil Sugar Company has been awarded to Kibos Sugar &Allied Industries Limited.
The lease
He said leasing of Sony Sugar Company has been awarded to Busia Sugar Industry Ltd, and that leasing of Muhoroni Sugar Company has been awarded to West Valley Sugar Company.
“The four firms were competitively procured by the government through the Ministry of Agriculture and Livestock Development, the Kenya Sugar Board, and other key government players,” he said.
He observed that the decision to lease out the four factories was arrived at after lengthy consultations with key stakeholders across the sugar sector including farmers, sugar factory workers, unions, Members of Parliament, Governors and approvals by the Cabinet.
The CS said the decision was informed by the need to ensure a return on investment for taxpayers, who have, over the years, bailed out the ailing sugar sector.
“Last year, the government wrote off over Ksh117 billion to bail out the local sugar industry and injected an additional Ksh2.5 billion to clear arrears owed to farmers and workers,” he said.
He observed that due process was followed in the lead up to the selection of leasing as a viable model for the transformation and rehabilitation of the four sugar factories, as earlier guided by Parliament and the Cabinet.
The four sugar companies
“In November 2018, the government established a task force on the sugar industry to examine the challenges facing public sugar companies and provide appropriate recommendations,” he said.
The Ministry further wishes to reassure all stakeholders that no public land will be sold or acquired under the leasing agreements, Kagwe pointed out.
“All assets belonging to the four sugar companies, including land, will remain the property of the national government. The assets will be leased out to the lessees annually based on the prevailing market rate, with proceeds being collected by the Kenya Sugar Board for reinvestment into communities around the four factories and for utilisation in cane development,” he said.
Kagwe said the matter of public participation has been litigated and ruled on, and that there was a public participation engagement which led to the recommendations that the Sugar companies be put on lease.
He called for continued support in realization of this vision noting that the government remained fully committed and ready to address any concerns that may arise.
“I would like to assure the public and all stakeholders that negotiated terms represent the best possible outcome to ensure the revival of the sugar sector,” the CS said.
