Lease cancellation thwarts strategy to save ailing Mumias

The recovery strategy for debt-ridden miller Mumias Sugar Company is in limbo after cancellation of a lease plan to raise capital last week.

And the entry of the Kakamega County governor with the intention of forming a committee to take over millers has been received with a pinch of salt.

Mumias had in April declared plans to lease seven key properties through an open tender, but suspended them amid opposition from the region’s political elite.

The properties included Mumias Sports Complex that has a football stadium, restaurant and pub, the nucleus sugar estate, the new modern office block, the Booker Academy Schools and the Mumias Sugar Housing estate and Supermarket.

Others targeted in the aborted lease were the modern water bottling plant within the factory premises and its 34.2 megawatts cogeneration plant.

“This is to inform the general public that the expression of interest that was advertised in the Daily Nation on April 30 has been suspended until further notice,” Mumias Sugar said last week.

The amounts Mumias Sugar stood to raise through the leases remain undisclosed, as calls to board of directors chairman Kennedy Ngumbau went unanswered.

With the Treasury silent on resuscitating the sugar cane-starved miller and opinion split on the sector’s revival, the once success story of Western Kenya is now facing survival a threat.

In what points to fights over the leasing plans, Kakamega Governor Wycliffe Oparanya said the county will not let individuals sabotage plans to revive the ailing miller.

“I have asked the company directors to attend a meeting with farmers and explain why they have decided to auction the company’s assets through the back door, even before recommendations to revive the sugar firm are acted upon,” the county chief said early this month.

With the cancellation, Mumias is unable to resume operations as Treasury is yet to inject Sh2 billion the miller requested last year. Mumias owes cane farmers Sh700 million and Sh20 billion to lenders and suppliers.

Kenya Revenue Authority last year said the miller had Sh1 billion in accrued tax arrears since 2012, highlighting its struggles to honour statutory obligations.

As the miller sinks deeper into financial turbulence, the eagerly awaited task force report on the ailing sugar industry will be presented to President Uhuru Kenyatta this week amid allegations of manipulation.

A farmer who was part of the task force claimed the report had been altered to include the zoning of sugar plantations that the majority of cane growers have vehemently opposed, saying it is anticompetitive.

“Zoning forces farmers to be tied to a single buyer for their crops, and that just quite simply removes all opportunity to get any price but one, as set by the miller they are allocated to,” Sugar Campaign for Change said early this year.

Mumias is counting on the report to partly save it by recommending zoning where farmers around the factory will be compelled to sell their cane even at lower prices than what rival millers are offering.

Meanwhile, cane farmers have criticised Governor Oparanya for his directive and now want leaders to keep off the affairs of the sector. They said county chiefs had not come out to support them in initiatives to save the sector.

“None of the counties has put money into sugar cane development, be it in Kisumu, Nandi, Kericho or Kakamega. The governors have no business in cane development,” said Kenya Sugarcane Growers Association Secretary-General Richard Ogendo.

Additional reporting by Victor Otieno.