Debt and mismanagement have led to the collapse or placement under receivership of five state-owned sugar millers in the cane-growing belt of Western Kenya.
Chemelil, Miwani (under receivership), Mumias (under receivership), Muhoroni (under receivership), Nzoia and Sony sugar companies have been struggling for years.
The government plans to revive the firms, making them viable again.
In the first step, Agriculture CS Peter Munya announced a waiver of Sh62. 5 billion debts owed by five sugar millers on July 3 to set the stage for their revival.
In the second step, the government said it would lease out the now debt-free sugar millers to private investors to turn them around.
On July 10, the Agriculture and Food Authority invited interested local and international investors (individual or consortium) familiar with the industry to submit expressions of interest.
AFA said the investors should have “world-class experience to redevelop the factories into large sugar complexes and manage them over a leasehold period of 25 years.”
The objective of the leases is to return the sugar companies to profit making through modernisation and efficient management. AFA wants the firms to be competitive in Kenya, EAC, Comesa and the global sugar market.
The deadline for submitting the EOI was August 3, and the bids were opened on August 4.
AFA said prequalified firms would be invited to the next stage where they will be required to present their proposals.
In the domestic market, the four sugar factories up for leasing have a combined share of 30 percent of the sugar industry, according to AFA.
The sugar sector is a source of income for more than 400,000 smallholder farmers who supply over 90 percent of the milled cane. For this reason, farmers have welcomed the leasing of the sugar firms as it will boost their earnings.
National Federation of Sugar Cane Farmers secretary general Ibrahim Juma told the Star on July 12 that the leasing process should take place without delay.
Athman Wangara a farmer in Mumias told the Star when the waiver was announced that the move will restore their confidence to resume sugar cane farming.
"As farmers, we were feeling orphaned because no one seemed to listen to our problems. We want the government to follow up to ensure the waiver has happened and those being appointed to manage the factories are given key deliverables," he told the Star on July 5.
