KENYA – The government of Kenya approved the leasing of five state owned sugar factories last month July, in a bid to increase value addition, farmers’ incomes and improve competitiveness and service delivery in the sugar Sector.
The factories will be leased through long term leases of at least 20 years under Right of Use (ROU) on a firm commitment that the lessee will re-develop and operate factory to meet the governments objectives.
The idea behind leasing is that government will invite investors with experience in the global sugar industry with a focus on sugar as the main product and co –production of ethanol, co-generation of power and value add products such as industrial sugar, pharma sugar and sugar cubes.
The five factories slated for leasing are Chemelil sugar, Miwani Sugar Company which is under receivership, Muhoroni sugar also under receivership, Nzoia sugar company and South Nyanza sugar company.
According to reports by Business Daily, the agriculture ministry has received bids from 29 companies including two firms linked to the billionaire Rai family i.e. West Kenya Sugar Company and Sukari Industries.
Other bidders are China CAMC Engineering Company Limited, Shenzhen Start Instruments, Mheta Group, Kiboss Sugar, Butali Sugar Mills, Mini Bakeries and Kuguru Food Complex.
“The next stage that will follow will be evaluation of the bids after which those ones that will qualify will be asked to present their proposal from which we shall pick the winners,” Benjamin Tito, chairperson of the tendering committee.
The government is banking on capital injection by private investors to revive the country’s sugar industry, long crippled by poor funding, ageing machinery and an overall high cost of production.
“We want to attract and finally secure only those investors we think serious and worthy enough to partner the government in the revival of the sugar industry in Kenya,” Agriculture Cabinet Secretary Peter Munya said.
Other reforms put in place by the government to revive the sector include, banning the importation of brown sugar into the Country since July and suspending sugar import permits and pre-shipment approvals until further notice.
This move aims to curb influx of the cheap sweetener in the domestic market, which has negatively impacted the local sector.
The government also approved debt write off of State-owned mills and Out-grower institutions as at 31st December last year.