Mumias sugar billions a bait for cartels and politicians

The controversy rocking the ongoing efforts to revive Mumias Sugar Company has affirmed the deep-running selfish interests in the country’s multi-billion-shilling sugar production business. What ails the sugar company is known from mismanagement to debt and aging machinery. 

Unfortunately, attempts to address these challenges has not borne any fruit over the decades due to interference by cartels who have immensely benefited from the lucrative sugar import business. 

Cartels have gone out of their way to frustrate reforms in the sugar industry through court fights or ridiculous political sideshows. 

For example, about a decade now there have been unfruitful attempts to inject private capital and expertise in the state-owned millers. We witnessed similar frustration recently when Mumias invited prospective lease partnerships in a bid to revive its operations. 

Even with the benefits of reforms, cartels won’t allow anything that threatens profit through the sugar import window. 

Some politicians have also made the reforms a campaign tool by giving empty promises during election period to secure votes. 

Governor Wycliffe Oparanya has in the recent past pleaded with President Kenyatta to offer a political solution for the revival of Mumias Sugar Company. 

According to him, the legal process of reviving the company has met several setbacks caused by sugar barons in the sector through courts. 

“We need a political solution to revive Mumias Sugar Company. We have tried the legal way without success.

Sugar cartels have vowed to frustrate the process to ensure the company does not get back to its feet,” said Oparanya. 

Speaking during a public participation forum at Mumias Cultural Centre in Mumias town, Oparanya revealed that the sugar barons have connections in the Ministry of Agriculture and Treasury, respectively, where they were using to hamper the revival plan of the plant. 

He said they go to the extent of bribing local politicians to block the process of reviving the once giant sugar miller in the country. 

“These barons are given licenses by Treasury to import sugar from Brazil and Egypt. They get millions from this business and that is why they don’t want to see Mumias Sugar Company revived,” he said. 

“I know these cartels. Some are based in Mombasa, Malaba border and other parts of Kenya,” he said. 

He added: “They even fund political leaders in their campaigns and that is why it is hard for some leaders to fight for the revival of Mumias.” 

Controversy around the sugar company continued to escalate on Tuesday with circulation of a letter in which a Jubilee legislator tried to secure campaign funds from the miller. 

ODM leader Raila Odinga, who has in the past accused Jubilee administration of being behind the company’s financial woes, has promised to revive the sugar sector if he is elected president in the August polls. 

Raila defended the planned leasing of sugar factories, saying the move will boost their revival. 

He said the sugar task force that was co-chaired by Oparanya and former Agriculture Cabinet Secretary Mwangi Kiunjuri recommended leasing of key sugar companies for sustainability but cartels have blocked the process using courts. 

“Cartels have continued to frustrate the process of reviving the sugar sector, the task force recommended leasing of the millers but some cartels have been using courts to block this process for personal aggrandizement,” Raila said. 

The sugar industry is dying for reforms to restore its old glory in terms of wealth creation and provision of jobs. 

It is uplifting that Mumias receiver-manager PVR Rao is taking another go at reviving the miller and invited bidders to invest in any of its nucleus estate, sugar factory, ethanol plant, mineral water plant, a golf course, clubhouse and residential estate, among other movable properties. 

However, Rao has blamed politics for scuttling the efforts to revive the debt-ridden miller. 

The receiver-manager through his legal officer, Patrick Mutuli, said he is still committed to reviving the miller despite opposition from some leaders and botched revival bid. 

“The company is in safe hands and the receiver has worked with the entire stakeholder to ensure their interests are met. That is why he has honoured summons and given explanation when due, concerning the lease,” said Mutuli on behalf of Rao. 

“We have had unnecessary opposition that has made it hard to do certain programmes but we hope all our leaders and stakeholders can come onboard and support our good initiative.” 

Rao said he is in control of the miller and has the interest of the factory and farmers at heart. 

More than 80 creditors are seeking to lease the factory to a rival miller in the hope that all debts will be repaid within 20 years. 

Devki Group boss Narendra Raval withdrew its lease bid in May, 2021. The steel tycoon who was one of the bidders withdrew his bid over calls for a publicity run bidding exercise, mostly by politicians. 

The matter ended up in the Senate’s Agriculture Committee which directed the receiver-manager to re-advertise the bids to salvage the troubled miller within 14 days. 

Other bidders were Catalysis Group of Russia, Sarrai Group (Uganda), Kruman Associates (France), Kibos Sugar, Premier JV and Third Gate Capital Management, Godavari Enterprises, both from India. 

Kakamega Senator Cleophas Malala wanted details of when the receiver-manager made the recommendations to lease the company and details of the procedure to be followed should the government intend to sell its 20 per cent stake in the company in its entirety. 

Amani National Congress Party leader Musalia Mudavadi also weighed in on the matter, saying locals must be fully involved in the revival of the factory. 

Rao and his management at the miller maintain that it is through him that the assets of the miller have been protected. 

The company was put into receivership after accumulating huge debts. The collapse was blamed on poor management.