• The amount includes Sh65,778,448,646 owed to the government of Kenya and Kenya Sugar Board as of June 30, 2023, by June 30, 2023.
• Ndung'u further wants MPs to approve the write-off of tax penalties amounting to Sh50,144,801,608 as of June 30, 2023.
Image: FILE
The National Treasury has sought Parliament's approval to write off Sh117 billion in loans and tax penalties owed by five sugar millers in the country.
In a memorandum submitted to Parliament on Tuesday, Cabinet Secretary Njuguna Ndung'u told lawmakers the waiver is part of the Treasury's action plan to revive the ailing Chemelil, Muhoroni, Miwani, Nzoia and Sony sugar companies.
"That the total of Sh65,778,448,646 owed to the government of Kenya and Kenya Sugar Board as of June 30, 2023, by the five sugar companies be written off," Ndung'u stated in the memorandum.
He said Parliament in January 2023 approved the write-off of Sh33,780,465,838 of the total amount but the government did not execute it as it was tied to a botched privatisation of the millers in 2015.
The privatisation was not concluded as it was opposed by stakeholders especially the communities because of sensitivities around permanent divestiture of land.
Ndung'u further wants MPs to approve the write-off of tax penalties amounting to Sh50,144,801,608 as of June 30, 2023.
The CS also wants Parliament to approve payment of over Sh1.7 billion owed to farmers by the sugar millers
"A payment plan for balances owed to farmers amounting to Sh1.715,129,404 be worked out by the Ministry of Agriculture and Livestock Development and the National Treasury," he said.
The tabulated debt status of the companies as listed by Ndung'u stands at Sh9,928,025,399 for Chemilil sugar, Sh7,218,188,993 for Sony sugar, Sh62,683,721,753 for Nzoia sugar, Sh26,133,890,927 for Muhoroni and Sh22,048,570,556 for Miwani.
Ndung'u listed five objectives of the action plan including the creation of a competitive sugar sector, enhancement of the profitability of sugar farming, productivity, increase in the tonnage of cane harvested per acre and achieving economies of scale.
Following the failure of the proposed privatisation, the CS said the proposed strategy is to lease the five millers to expedite their rehabilitation and expansion "with a view to enhancing the competitiveness of the industry prior to; lapsing of the Common Market of Eastern and Southern Africa (COMESA) sugar safeguards".
He further asked MPs to approve the merger of Chemilil and Mohoroni sugar companies to form one zone with a total cane growing 40,571 hectares.
Nzoia and Sony, he said, will retain their respective cane-growing areas of 49,862 and 81,415 respectively.
"The decisions on Miwani Sugar company to be made once ongoing court cases are determined," Ndung'u said.