Mumias Sugar Seeks another 2 Billion Shillings Bailout

Ailing Mumias Sugar Company is once again seeking for a 2 billion-shilling bailout from the government in an effort to revive operations.

Mumias Sugar Company management said that the funding would help them settle some of the key debts they owe suppliers including the Kenya Revenue Authority (KRA), Kenya Power and their workers.

The Sugar Company owes Kenya Power 2 billion shillings, 1 billion shillings for KRA in unpaid taxes and over 700 million shillings for workers who have not received payments in the last 17 months.

The Company disclosed that the 2 billion shillings they sought would enable them to get at least 500 million shillings to start off production as they keep rooting for the rest since getting the whole amount has been a challenge.

Board Chairman Kennedy Ngumbao said that apart from sending a bail-off request from Treasury, the firm was also in talks with other government agencies and creditors to find a way to revive the once top cane miller in the country.

While requesting for additional funds, the sugar company management said it had presented a turnaround plan to the Treasury for approval as it awaited a way forward on the matter.

Last year, the company’s management had reported that the government had agreed to give them 3.14 billion shillings which were supposed to have been released in three tranches.

Mumias Sugar has in the last three years received a total of 3.5 billion shillings from the Treasury, as part of government efforts to revive operations and steer the miller back to profitability, however, the funds have led to very little improvement on the company’s earnings and capital position. The government owns a 20 percent stake in the firm.

There have been a number of allegations on misappropriation of funds by the firm’s management.

Mumias, once the largest miller with the capacity to crush 9,000 tonnes of cane daily, crushed a paltry 1,000 tonnes before its recent closure.

The miller woes have seen the acreage under cane fall from 220,000 hectares about 10 years ago to below 100,000 hectares. The inefficiency rocking Mumias has also dragged down public millers’ total installed crushing capacity from 35,000 tonnes of cane per day to just over 3,000 tonnes.