Troubled Mumias set to face shareholders

Mumias Sugar Company has called an annual general meeting to discuss its dwindling fortunes.

A notice by the company secretary Amuhaya Barasa inviting members to a meeting on December 6 at the Tom Mboya Labour College in Kisumu lists audit and financial reports as some of the key items for discussion.

This comes amid fears that the firm may take longer to reopen its milling plant that was closed down in October for maintenance amid a shortage of cane for crushing.

Having declared a net loss of Sh2.7 billion in the last fiscal year, the company cannot repay its debts, which amount to Sh5 billion.

The situation, in part, led government to licence at least 10 companies to import sugar.

“The market conditions that have necessitated this adjustment include the below-par performance of Mumias Sugar mill resulting into its unscheduled closure in October 2014 for early maintenance as they allow build-up of raw material,” the interim boss of the Sugar Directorate Rosemary Mkok told Sunday Nation of the decision to issue licences to importers.

Three other factories — West Kenya, Kibos and Soin — have also closed for maintenance.

UNDER RECEIVERSHIP
With reports that the government was contemplating putting Mumias under receivership, Ms Mkok said this is not one of the options they were considering although Sunday Nation learnt the matter came up in one of the board meetings.

“Instead, a feasible turn around strategy is under consideration and will be shared once firmed up,” she said.

Although Ms Mkok said the process of licensing importers was above board, it is always replete with claims of favouritism.

MPs like Ayub Savula (Lugari) have already faulted the move arguing there was no shortage of sugar in the country to warrant the importation.

“We have scaled up our monitoring and surveillance unit to ensure compliance with laid down regulations. The serious risks posed to the economy and the industry at large by the continued access into the domestic market by uncustomed sugar is top on our agenda,” she said.

Describing the sugar market situation as depressing, Ms Mkok said the unplanned closure of Mumias and Kibos sugar has decreased domestic output by 51 per cent.

A fortnight ago, the Sunday Nation ran an exposé based on an internal audit detailing how previous managers had abused internal control systems from the farm all the way through to the company headquarters, embezzling at least Sh2.08 billion.

PATH TO RECOVERY
To help put Mumias on the path to recovery, Ms Mkok said the government had released Sh903 million to off-set farmers’ arrears and also support cane development.

It will come as a great relief to cane farmers and millers when the government actualises its plan of writing off Sh44 billion owed to it. The move awaits the approval by the National Assembly.

And to further help an ailing industry, Ms Mkok said the government has from this year included sugarcane, together with coffee and tea farmers under the Fertiliser and Seed Subsidy Fund meaning they would benefit from cheaper farm inputs.

Statistics from the directorate indicate that Kenya remains a sugar deficit country, producing approximately 600,000 tonnes against a demand of 841,000 metric tonnes of sugar annually.

It says the gap in local production of approximately 200,000 tonnes is supplemented by imported sugar mainly from the Comesa and the East African Community market.