Four troubled state owned sugar companies have been leased by the government for a period of 30 years in what agriculture ministry says is meant to support the revival of the sugar sector.
The four factories include Nzoia Sugar Company whose lease has been awarded to West Kenya Sugar Company, Chemilil Sugar Company awarded to Kibos Sugar & Allied Industries Ltd, Sony Sugar Company awarded to Busia Sugar Industry Ltd and Muhoroni Sugar Company which has been leased to West Valley Sugar Company Ltd..
Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe said, during the lease period, no public land will be sold or acquired under the leasing agreements.
“All assets belonging to the four sugar companies, including land, will remain the property of the national government. The assets will be leased out to the lessees annually based on the prevailing market rate with all proceeds being collected by the Kenya Sugar Board for reinvestment into communities around the 4
factories and for utilization in cane development,” said Kagwe.
The finalization of the lease agreements comes on the backdrop of piling debts by the four sugar mills running into billions of shillings and which are owed to employees and farmers.
According to revelations by the ministry, despite paying cane delivery arrears amounting to Ksh 1.7 billion last year, the companies have accrued another Ksh 500 million. This amount under the lease agreement will be paid by the government from July this year.
Additionally, the factories have also accumulated a total of Ksh 5.6 billion in arrear owed to factory workers despite the government clearing Ksh 600 million last year.
The four private millers who have leased the factories will each have a one year transition period to evaluate their workforce demand and criteria for retaining current employees as government commits to clear all salary arrears, pension contributions, and statutory deductions up to the lease handover date.
“Under the agreement the government settle arrears owed to both farmers and workers before the handover of the four factories to private millers,” added Kagwe.
The ministry plans to allocate Ksh 1 billion for payment of salary arrears out of which Ksh 600 million will be used to pay part of the staff arrears and the remaining Ksh 400 million to pay salary as from the month of May 2025.
Kagwe says another Ksh 1.5 billion will be released in July, 2025 to be used for the payment of staff salaries and arrears as the government commits to pay salaries arrears at the rate of Ksh 1.17 billion on a quarterly basis until June 30, 2026.
