SUGAR WOES

Jitters as Sony Sugar heads to ICU

Only factory in Migori faces closure as government plans privatization.

In Summary

• Workers sent on compulsory leave amid uncertainty over whether they will be recalled.

• In Manyatta where cane cutters and other casual labourers live in mabati single rooms, the news has struck like a hurricane.

Troubled Sony Sugar company in Migori
HARD TIMES: Troubled Sony Sugar company in Migori
Image: FILE

South Nyanza Sugar Company (Sony) has sent on compulsory unpaid leave all casual employees, citing financial difficulties.

The three-month leave order has sent shockwaves across Migori county where the giant miller is a source of livelihood for thousands of people.

On May 9, the company’s managing director James Oluoch wrote to workers pointing out that the leave would start on May 13. He said workers who had gone for months without a salary would be paid in two weeks.

Following the news, residents, workers and traders in Awendo town where the factory is situated have expressed fears over their future as the factory faces closure.

“It is like sitting through a a bad horror movie shot in slow motion. What happens in the only factory in Migori county will have a domino effect on most of us,” Alice Akinyi, a trader in Awendo town, said.

Akinyi has for the past two years been running a shoe and fashion business in Awendo town and relied for customers on the over 3,000 workers employed directly or indirectly by the company.

“I am yet to recoup my initial seed money. Nowadays, each end month has been painfully slow in sales as sugarcane farmers, suppliers and workers are faced with erratic pay,” Akinyi said.

In Manyatta, a town off the Sony plantations where cane cutters and other casual labourers live in mabati single rooms, the news has struck like a hurricane.

“We don’t have hope anywhere in getting our livelihood back with the company. Most of us only knew Sony as our source of income for decades,” said Albert Odira, a casual labourer with the company for over a decade.

Odira said he has already moved his family back to his rural home as he thinks of his next move.

On Monday, Oluoch and Sony board chairman Owino Likowa in a press conference said suspending casual workers was only a temporary measure.

“We honestly don’t know when they will come back, but after three months they may be back as they understand we have a problem with cash flow. Let them be content with they will get as a schedule to pay them their dues will be out in two weeks,” Likowa said.

Oluoch in his letter said the company has been experiencing unfavorable business environment characterised by massive loss of cane to private millers.

He complained that the current poor state of the company finances has been caused by “lack of regulations and a dispute resolution mechanism in the sector.”

“The period February to date gas seen the factory physically deteriorate, recording declining performance,” he said.

Sony Sugar and other failing millers Nzoia, Miwani, Muhoroni and Chemelil have been slotted for privatization.

Earlier this month, the Privatisation Commission advertised for consultancy services on the process.

The tender was set to close on May 14 and the sugar companies sold within 120 days afterwards.

Last December, Kenya Revenue Authority announced that the sugar mills owed Sh17.1 billion in taxes.

Sony last made a Sh1.142 billion pre-tax profit in the 2011-12 financial year attributed to reduction of cost of doing business, reduced wastage of cane during transport and tracking of pricing of sugar to maximize profit by former managing director Paul Odola.

Immediate former MD Bernard Otieno said since 2012 the company has lost Sh290billion from investment on infrastructure like fertliser, seed cane and other farm inputs to contracted farmers due to poaching.

“We have invested in farmers and the returns to company have not been forthcoming. Actually, in a year the company has been losing over Sh1 billion worth of sugarcane to our neighbours,” he told the Star on May 5.

Otieno was sent on compulsory leave after workers went on strike over unpaid dues.