11 April 2019

Kenya: Cash-Strapped Mumias Sugar Denies Asset Disposal Claims

The management of Mumias Sugar Company has denied claims that it intends to sell some of the company's assets to sustain operations.

Board chairman Kennedy Ngumbau clarified on Thursday that some of the non-core assets - including the golf course, guest house, water bottling plant, sports ground, real estate and schools - will be leased to boost the revenue base and increase efficiency and production.

Mr Ngumbau also dismissed claims by some politicians that the organisation was selling off assets as part of preparations to wind up the company.

"We don't have any intention to sell any asset. It is not possible because Mumias is a company registered under the Capital Markets Authority. All assets are controlled by the lenders," he said and accused politicians of giving the public misleading information.


Bungoma Senator Moses Wetang'ula earlier claimed that the management of Mumias was planning to dispose of its assets.

But speaking to the Nation by phone on Thursday, Mr Gumbau said: "Our idea is to commercialise non-core assets, some which are operating without benefitting the company and others which have remained idle for the last three years."

"The golf course is underutilised and has become bushy. The company is paying workers at the guest house yet it's not operating. This [results in more] losses for the company. Those who will lease the ventures will act as agents for the management," he added.

The chairman noted that the assets would be leased through a legal and competitive process.

"We want to get qualified agents to manage assets which are not adding value to the company. Money received from the ventures will be wired to the company's account to help the factory manage its operations."


Mr Ngumbau claimed politicians were frustrating the process of reviving Mumias, saying they get in the way whenever it appears successful.

He claimed some politicians from the region funded hooligans to burn the company's nucleus sugarcane scheme late in March.

"If political leaders from Western don't change their attitude towards Mumias, they will derail its revival and bring it down," he said.


Mumias Managing Director Isaac Sheunda said tenants in the company's houses were paying amounts less than appropriate while majority had arrears.

"Some tenants are paying Sh10,000 for houses [whose rents are] Sh30,000. We need someone to manage the 2,300 houses in our estates so that they become profitable," said Mr Sheunda.

He pointed out that the firm can become self-reliant and stop relying on bailouts if it concentrates on cane crushing.


Mr Sheunda said the management had started implementing a strategy that would ensure Mumias' profitability.

"We are trying to reduce expenses to stabilise factory operations," he said, noting crushing was not taking place at full capacity due to the amount of cane available.

He added that the ethanol distillery was functional.

Mr Sheunda also said they held negotiations with some employees and offered them early retirement packages.

The miller has also approached lenders, unions and farmers for support in the the revival process, he said.

He added that Kenya Power agreed to restore power supply following talks held with its officials.


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