The planned sale of the ailing sugar companies in the country to private investors has been put on hold after the government said it would lease out the firms to investors instead.
President William Ruto, in a statement released after the just concluded four-day tour of the Nyanza region, said that the decision aimed to protect the factories and safeguard the interest of farmers.
Get exclusive access to the groundbreaking story of Ms. Faith Odhiambo’s historic presidency at LSK in our Latest Edition of Nairobi Law Monthly MagazineDownload Latest Edition Now For Ksh 150!
Ruto said those interested in running and reviving the companies would only be allowed to do so through a lease programme.
The Head of State observed that privatisation is not a viable option, as it would result in private firms assuming ownership of farms.
This is even as he argued that resources from the private sector will be instrumental in upgrading the factories’ facilities to enhance efficiency.
“We will lease sugar factories to revive the ailing sector and ensure prudent management of the factories to safeguard the interests of farmers. We will agree with them (private investors) to install new machines and pay farmers on time,” Ruto said.
The decision by the President also follows a Monday cabinet resolution to write off Sh117 billion debt owed by state-owned millers ahead of the leasing programme.
In a Monday, October 9 meeting held at the Kisumu State Lodge, the Cabinet decided in favour of a resolution passed by both Houses of Parliament to save the ailing factories.
The Cabinet also approved a plan to pay arrears owed to farmers by the sugar millers as well as a waiver of tax penalties and interests. The millers owe banks Sh65 billion, Sh50 billion in taxes, and nearly Sh2 billion in farmers’ dues.
Already, two committees of the National Assembly have also begun engaging with various stakeholders in the sugar sector to gather views on the proposed leasing process of the sugar companies.
The meetings being held by the National Assembly’s two Finance and Agriculture committees follow a directive issued by Speaker of the Assembly Moses Wetang’ula and Majority Leader Kimani Ichung’wa.
Wetang’ula and Ichung’wa made the call in line with a memorandum issued by the National Treasury calling for Parliamentary engagement on the matter ahead of the revitalization.
So far, The two committees have held meetings with MPs and MCAs from sugarcane growing areas, farmers, management of state-owned sugar millers, the National Treasury, and the Ministry of Agriculture.
“The financial woes of these state-owned sugar companies are staggering, with a collective debt reaching a staggering Sh128.06 Billion as of June 30, 2023. The debt has been a major impediment to the industry’s growth and sustainability,” said Molo MP, Kuria Kimani, also chairman of the finance and planning committee.