Kenya: Mumias Sugar Quick Revival Hopes Dashed

16 September 2020

The receiver manager appointed by the Kenya Commercial Bank (KCB) to turn around the financially struggling Mumias Sugar Company is on the spot after local growers accused him of doing little to revive sugar milling operations a year after he took over the firm.

Farmers have accused Mr Ponangipalli Venkata Ramana Rao of promising to restart milling of sugar cane when he took over the debt ridden miller in September 2019.

Mr Rao is being asked to publish a report indicating how much revenue he had generated since he took over and the debts he had settled.

Lugari MP Ayub Savula said Mr Rao should come up with a report on his performance as the receiver manager for the last one year.

Shareholders of the troubled miller want the receiver manager to publish a report to enable the public to establish whether he was making progress in reviving the miller.

"Mumias Sugar is a key factor in our region and we will not sit back and watch as things go wrong. If the current receiver manager is unable to deliver, he should prepare to pack and go," said Mr Savula.

The MP said Mr Rao should take advantage of the move by the government to waive debts owed by miller to kick-start operations.

Farmers said they had hoped the receiver manager would put in place strategies to improve the fortunes of the miller in the last one year.

Mr Simon Wesechere, the deputy secretary of the Kenya National Federation of Sugarcane Farmers (KNFSF), said farmers in the Mumias Sugar catchment were tired of promises made by Mr Rao.

"A year has gone by since Mr Rao promised to revive the miller and restart operations but there is very little going on at the factory at the moment," said Mr Wesechere.

Mr Rao has focussed on production of ethanol since he took over the running of the factory. He had indicated that the revenue generated from the sale of the ethanol would be spent on maintenance of the mills as plans were being made to kick-start milling of sugar.

Plans by the receiver manager to procure critical equipment needed to operationalise the mill are yet to materialise.

Mr Rao had indicated that he had ordered for the rotors from a supplier in South Africa but plans to ship the spare parts to the country in the last two months had been disrupted by the Covid-19 pandemic.

"We had expected the equipment would be shipped to the country by August but that did not happen because the supplier had closed operations due to the Covid-19 pandemic," said Mr Rao in an interview last month.

Management officials at the factory told the Nation that ethanol production was currently going on.

"Last week, we managed to produce 470,000 litres and we are currently selling it to generate revenue to sustain our operations," said a management official.

Last month, the miller increased the price of ethanol by Sh20 per litre due to the growing demand for the product for the manufacturing of hand sanitisers.

But the move by the miller is reported to have jolted buyers of the product, slowing sales.

Mr Rao is reported to have sanctioned the new price to cushion the miller from losses due to a shortage of molasses.

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