• Chemelil managing director Gabriel Nyangweso said for the last six years, they have experienced declining sugarcane supply, depressing ex-factory sugar price and high cost of production.
• He attributed unpaid salaries to liquidity challenges, machine inefficiency and high cost of production.
Workers in state-owned sugar companies are owed about Sh2.8 billion in salary arrears.
The arrears owed by Chemelil, Muhoroni, Sony, Mumias and Nzoia date back to several years.
Chemelil owes staff a total of Sh844 million- Sh438 million for net salary arrears, and Sh152 million for retirement benefits and terminal dues for 175 former employees as of July 31, 2019.
A total of Sh253.9 million out of the Sh844 million is for unremitted statutory and other deductions.
The amount of outstanding statutory and other deductions is expected to grow by Sh20 million to Sh273 million by September, 2019.
The company has 600 permanent employees and 469 contracted workers.
On March 2019, the company suspended milling operations after farmers withdrew supply of cane citing accumulated arrears.
Chemelil managing director Gabriel Nyangweso said for the last six years, they have experienced declining sugarcane supply, depressing ex-factory sugar price and high cost of production.
He attributed unpaid salaries to liquidity challenges, machine inefficiency and high cost of production.
Chemelil branch workers union secretary general Paul Menya said they are unable to pay school fees and feed their families. He asked the government to ensure all their dues are cleared.
Muhoroni, which is under receivership, owes workers Sh312 million inclusive of retirement benefits and terminal dues.
The company’s receiver manager, Elisha Ooko, said they are unable to hire and retain caliber staff due to current receivership status.
He said the poor financial status of the company has led to delayed salaries.
“We have a high labour cost that consumes an average of 23 per cent of all revenue generated against an acceptable 15-17 per cent. This is due to old technology and CBAs that do not include labour productivity factor,” Ooko said.
Salary arrears prompted the Parliamentary Committee on Labour and Social Welfare to visit Chemelil, Muhoroni and Sony Sugar Company in Migori on Friday and Saturday to establish the true status and seek a remedy.
The committee, chaired by Bura MP Ali Wario, noted the suffering workers are undergoing and pledged to push for their payment.
The committee members included Onyango Koyoo, Tom Odege, Ronald Tonui, David Sangok, Michael Muchira, and Janet Nangabo.
Tonui, who led the committee, said the main objective of the visit was to find out the issue of nonpayment of salaries to employees of various sugar companies. “We will make sure the arrears are paid,” Sangok said.
Koyoo appealed to the government to offset workers' dues and also pump in money to revitalise the company before it is privatised.
“We are not opposed to privatisation but it must be done properly and in accordance with the law,” he said.
Koyoo said any attempts to deliberately shut down the factories so as to sell it “cheaply” to an investor will be resisted.
“Muhoroni and Chemelil must be made vibrant in production before they are sold. We cannot accept plans to sell them as scrap metals,” he said.
Kenya Union of Sugar Plantation and Allied Workers General Secretary Francis Wangara said workers were suffering over salary arrears.
Wangara said the government only paid the arrears owed to the farmers but failed to address their plight.
The government needs to urgently intervene to rescue worker from suffering, he said, adding that they are languishing in poverty.
Workers questioned why they are being treated unfairly. “We want the government to find ways to offset our arrears the same way they paid the arrears owed to farmers by the companies,” Wangara said.