Troubled Mumias Sugar Company has resumed ethanol production which the management says is a step towards resuming cane crushing suspended in April.
The company shut down due to low cane supply, heightened by poaching from rival millers.
Acting CEO Patrick Chebosi said the miller is using bagasse and molasses sourced from neighbouring millers to produce ethanol.
The brewing industry is the main user of ethanol. Proceeds from the sale of ethanol will be used to pay farmers and workers who have gone for more than a year without pay.
The company owes sugarcane farmers over Sh700 million in arrears for their deliveries, some dating over a year.
“The employees were only paid this year after I took over and sold some of the stored ethanol enabling us to pay part of the June salaries,” said Chebosi.
The company, scheduled to resume milling last week, failed after transporters demanded to be paid Sh40 million arrears upfront out of the total Sh81 million debt.
“We want to generate our own funds as we wait for the roll out of a bailout plan by the National Treasury,” Chebosi said.
Treasury has so far disbursed Sh 3.7 billion to the miller under its revival plan. The miller has accumulated over Sh 20 billion in debts owed to financial institutions, farmers and contractors.
On Sunday, Kenya Power, for the second time in a month disconnected electricity supply from the company over a Sh1.2 billion debt.
The miller is now relying on backup generators to run the plant. The company is however concerned that that the use of generators may be short lived, given the high cost of fuel following the introduction of Value Added Tax on petroleum products.
“We are in discussions with Kenya Power to reconnect us and agree on how we pay their debt,” Chebosi said.
The company’s troubles worsened last week after a former staff – Pamela Lutta attached nine of its vehicles to recover Sh13.5 million awarded to her by the court for wrongful dismissal. Most state owned sugar companies among them Chemeli, Sony and Muhoroni are facing tough times.