Kenya: Labour Court Suspends Leasing of 5 State-Owned Sugar Factories

13 August 2020

Employment and Labour Relations Court in Kisumu has stopped the ongoing leasing of the five State-owned sugar factories pending the hearing and determination of a case filed by a workers' union.

The order issued by Justice Nduma Nderi on Thursday suspended any business in relation to the leasing after the Kenya Union of Sugar Plantation and Allied Workers (Kuspaw) claimed it had been side-lined in the process and failure by the government to settle their Sh5 billion arrears.

"It is hereby ordered that pending the hearing and determination of this application inter partes, the honourable court hereby issues an order of injunction stopping the leasing of the State-owned sugar factories and or conducting further business in relation to leasing of the said factories," ruled Justice Nderi.

The order now temporarily stops the leasing of Chemelil Sugar, Miwani Sugar (under receivership), Muhoroni Sugar (under receivership), Nzoia Sugar and South Nyanza Sugar Company.

Kuspaw General-Secretary Francis Wangara accused Agriculture Cabinet Secretary Peter Munya of ignoring their concerns despite writing a letter to his office.

Not opposed to leasing

"We are not opposed to the move to have the five factories leased but we are concerned that the plight of over 5,000 workers is being pushed to the periphery," he told the Nation.

Unlike farmers who have benefitted from a number of bailout programmes, the arrears for the sugarcane farmers have accumulated over the years, Mr Wangara stated.

He also alleged that workers had not been engaged in the tendering process and in picking the team to spearhead the leasing out of the mills.

"Workers have been ignored. We are ready to listen to the government but this is the time we have to make sure they pay us everything before the process continues," he said.

On its knees

The government this month established a team to guide the process of leasing out the five State-owned sugar mills as it seeks to re-energise the sector which is currently on its knees.

Those who have expressed interest to take over the management of the five troubled factories include two firms linked to tycoon Jaswant Rai, West Kenya Sugar Company and Sukari Industries.

Others are China CAMC Engineering Company Limited, Shenzhen Start Instruments, Mehta Group, Kibos Sugar, Butali Sugar Mills, Mini Bakeries and Kuguru Food Complex.

Successful financiers are expected to lease, redevelop and operate the sugar complexes at sufficient processing capacities to support diversification into cogeneration of export power, production of bioethanol and allied coproducts.

Efficient management of the factories is expected to play a significant role in the country's socio-economic development including food security, job creation, rural development besides being a source of livelihood for over eight million Kenyans.

The sugar sector is a source of income for over 400,000 smallholder farmers who supply over 90 per cent of the cane that is milled.

In the domestic market, the sugar factories have a combined 30 per cent market share with a potential to increase their capacities and help the country meet its sugar consumption demand which is approximately one million tonnes per annum.

CS Munya has also revoked the appointment of board members of State-owned sugar millers as the government prepares to inject new lease of life to the struggling debt-ridden companies.

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