• Senators criticise directorate, saying it has failed to insulate public companies from unethical and unfair practices by private operators
• Committee rubbishes regulator's claims they have never received formal complaint
Image: FILE
Senators on Thursday put the Ministry of Agriculture on the spot for failing to protect state-owned sugar companies.
The ministry’s Sugar Directorate regulates the sugar industry.
The senators criticised the directorate, saying it has failed to insulate public companies from unethical and unfair practices by their private counterparts.
This came after it emerged that the regulator failed to rein in rogue private companies that have been raiding raw materials (cane) meant for the public firms thus incapacitating them.
“People call it cane poaching but I want to call it theft. We have two companies that have been stealing our sugarcane. We have written letters to the regular to intervene but nothing has happened,” Sony Sugar board chairman Charles Owino said.
Owino appeared before the Senate Agriculture committee alongside the company acting MD James Oluoch to provide information on the status of the firm.
Acting Sugar Directorate CEO Solomon Odera and Agriculture secretary Anne Onyango attended.
“If the complaints have been filed and the names of the companies involved in the theft which you license have been tabled, why haven’t you revoked these licenses?” Embu Senator Njeru Ndwiga, who is also the chairperson of the committee, asked.
Oluoch said cane poaching has occasioned the cumulative loss of over 900 hectares of cane valued at Sh2.3 billion.
Odera defended the directorate, saying they have never received a formal complaint from the company regarding the matter.
But the explanation was rubbished by the chairman, who told the committee that he had correspondence to prove they have sought the regulator's intervention.
Odera, appearing cornered, shifted the blame on the lack of regulation for the unfair practices in the industry.
But Migori Senator Ochilo Ayacko trashed the argument, saying the regulator has the powers to discipline a rogue firm.
“You are the body that issues licenses, therefore, you can also suspend and revoke the same. You cannot blame lack of regulations for that,” Ayacko said.
Sony Sugar alongside Miwani, Chemelil and Mumias—all state-owned—have struggled in the recent years due to poor management, lack of raw materials (cane) and corruption.
The government has been mulling privatising the firms.
Oluoch said Sony is on its deathbed citing poaching, huge debt, several court cases and frequent breakdown of machines.
“Due to fluctuating and unpredictable revenue flows and failure to maintain the factory since 2016-17 financial year due to unfavourable prevailing circumstances, uptime and efficiency of the factory have been severely affected,” he said.
Due to the frequent breakdowns, the factory’s milling capacity has reduced by 45.5 per cent, from an average of 2,750 tonnes of cane to 1,500 tonnes per day, he said.
The company total debts stand at Sh4.31 billion, the bulk of it owned to farmers, staff, loans and unremitted statutory deductions.
“Due to the challenges, the business has been operating below the target. As a result and in the environment of very high fixed costs, the unit cost of production has increased far beyond the budget figure,” Oluoch said.
Mwita Nyangi, a member of the company’s board, said the firm needs at least Sh238 million to repair the machine and have the company back to normalcy.