Treasury halts Sony Sugar land auction over Sh862million Co-op Bank debt

The National Treasury has intervened to stop the planned auction of land belonging to South Nyanza Sugar Company (Sony Sugar) over an outstanding Sh862.3 million debt owed to Co-operative Bank of Kenya.

Awendo MP Walter Owino said the Government had taken action following public concern over a 40-day auction notice issued by the bank against the State-owned sugar miller.

“Following public concern surrounding the 40-day ultimatum auction of Sony Sugar land assets by Co-operative Bank of Kenya over outstanding liabilities, concrete government action has been taken to safeguard the company’s assets and protect the livelihoods dependent on the miller,” Owino said in a statement on Tuesday, August 18.

According to the MP, the loan owed to Co-operative Bank had already been recognised as a public pending bill during the Government’s restructuring of State-owned sugar companies ahead of their planned leasing.

Owino said he engaged National Treasury and Economic Planning Cabinet Secretary John Mbadi, resulting in an undertaking by the ministry to expedite settlement of the bank facility.

“The Ministry has undertaken to expedite an agreement to settle the Co-operative Bank facility in full. This action effectively resolves the debt dispute and halts any forced auction of public mill property,” he said.

The intervention is also expected to address long-standing arrears owed to sugarcane farmers and employees of the miller.

Owino said the Treasury’s intervention would incorporate the clearance of outstanding payments to farmers and factory workers, providing relief across the local sugar value chain.

“Beyond resolving the institutional debt, the National Treasury’s intervention incorporates the clearance of long-outstanding arrears owed to sugarcane farmers and factory staff, ensuring equitable relief across the local sugar value chain,” he said.

He added that Sony Sugar management would communicate timelines for disbursement of the payments through official channels.

The Government intervention follows a formal demand from Co-operative Bank, which warned Sony Sugar that it would exercise its statutory power of sale over property used as security for the facility.

In a letter addressed to the company’s chief executive officer, the bank said Sony Sugar had failed to remedy the default despite an earlier notice.

The bank put the outstanding debt at Sh862,328,980.41 as of July 14, 2026.

“As you are fully aware and despite the notice mentioned above, you have not rectified the default, and you owe the Bank the sum of Ksh862,328,980.41 as of 14th July 2026,” the bank said.

The property identified for sale is L.R. No. 16339/1, registered in the name of South Nyanza Sugar Company Limited.

Co-operative Bank gave the company 40 days from the date of service of the notice to clear the debt, warning that failure to do so would trigger the sale of the secured property.

“Take notice that the Bank intends to exercise its statutory power of sale over Property L.R No. 16339/1… after expiry of forty (40) days from the date of service of this Notice,” the bank said.

The lender further cautioned that any repayment arrangement or payments made after issuance of the notice would not automatically prevent it from exercising its rights over the property.

The planned auction had raised concern in Awendo and surrounding sugar-growing areas because of Sony Sugar’s importance to farmers, workers and businesses dependent on the miller.