29 companies express interest to lease government-owned sugar mills

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By Marion wagaki, Rootooba, 7 August  2020

Twenty-nine companies have expressed interest in leasing state-owned sugar mills after the government efforts to attract new investments into the sugar sub-sector called for the private sector to declare interest.

This will pave the way for the possible take-over of the struggling and heavily indebted entities by private players.

The companies prequalified for the lease had presented their interest and documents online and others physically after the government through an International Expression of Interest advertised on 10th July 2020 and closed the bidding on 3rd August 2020.

A technical committee of officials drawn from various agencies under the Agriculture and Food Authority (AFA) presided over the exercise of opening the bids yesterday at their headquarters.

Speaking during the exercise at the AFA offices, the Interim Head of Horticulture Crops Directorate Benjamin Tito, who chaired the committee, said some of the companies had six bundles of documents. In contrast, only one company presented a single document.

The opening of the bids comes one day after agriculture cabinet secretary Peter Munya announced that the sugar industry’s reform agenda is still on despite opposition from various quarters, especially local leadership.

He had explained that the ministry received Cabinet approval to invite investors to take long-term leases on the five state-owned Mills namely; Chemelil Sugar Company Ltd, Muhoroni Sugar Company (In receivership) Ltd, Miwani Sugar Company (In receivership) Ltd, Nzoia Sugar Company Ltd, and Sony Sugar Company Ltd.

The leasing model is different from the approach of inviting strategic investors to buy a stake of the companies as proposed by the privatization commission.

Munya confirmed that after opening up the bids, AFA would send out a Request for Proposal (RFP) to all the firms prequalified at the Expression of Interest stage. Later, the investors will be taken through an evaluation process of 28 days.

Some of the companies that presented their EOI include local private companies -Butali, Sukari, Kibos, Trans Mara and a consortium of cooperative societies. Recently Munya had noted that private sugar companies have been performing better compared to Government-owned mills.

Announcing the progress of leasing the state-owned sugar mills at Kilimo House grounds on Monday, Munya said that the sugar reforms were designed to help stabilize the sugar industry, implement the Sugar Regulations 2020 and the Sugar imports, exports and by-products regulations 2020.

The CS noted that regulations seek to address sugar cane development plans, the milling capacity of millers, the establishment and functions of the sugar cane pricing committees and the implementation of sugar cane testing services and standards.

Last month, the government temporarily suspended the importation of sugar due to an influx of imported sugar in the first half of the year, which led to serious market distortions.

“We can have a sector that rewards the farmer and makes sugar affordable to consumers. I urge all the stakeholders, including the public, to support these historical efforts,” Munya said.

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