Billions lined up as investors turn to sugar mills amid rising demand
A farmer topdressing Urea and DAP fertiliser on sugarcane at Muliru area Ikolomani in Kakamega County on October 2, 2022.
A fresh round of multi-billion shilling investments is lined up for the sugar industry in Kenya as investors trooped in hoping to capitalise on a widening deficit in the production of the sweetener.
A review of the investment pipeline shows that more than Sh15 billion in fresh capital is targeted for the limping sugar industry towards greenfield projects as well as the expansion of some existing processing factories and cane farms.
The bulk of the greenfield sugar factory projects falls within Narok, Nandi, and Kericho counties—marking a noticeable shift from the traditional cane-growing zones in western Kenya such as Kisumu, Nyando, Mumias, Migori, Homa Bay, and Kakamega.
Once vibrant and dominant State-owned sugar millers in western Kenya including Chemelil, Sony, Muhoroni, Nzoia, and Mumias are in a sorry state amid pilling debt, aging machinery, and biting shortage of raw materials.
This situation has left the country reliant on imports because the private players such as West Kenya Sugar Company, Sukari Industries, Kibos Sugar and Allied Industries and Butali Sugar Company cannot cope with the rising national demand for the sweetener. Kenya has over the years had a traditional annual deficit of about 200,000 tonnes of sugar which has since widened due to rising consumer populations.
Lured by the opportunity to fill the gaps, several private investors are now trooping in will loads of fresh capital to set up sugar milling plants.
For instance, Sukari Industries Limited plans to establish a new Sh5.13 billion factory complex at Moyoi, Lolgorian in Narok County with a capacity to mill 3,000 tonnes of cane per day(TCD).
The company has already procured a 20.195-hectare parcel of land to construct the envisaged factory and host housing quarters for technical and managerial staff. Additional land parcels will be acquired at an appropriate time for further expansion.
“The project involves a new vacuum pan plant consisting of a 3,000 TCD sugar milling plant, with possibilities of upgrading to a 6,000-TCD capacity. The vacuum pan process employs intermediate automatic technology, which is, not labour intensive, and requires no more than medium-level production staff cadres for its operation and maintenance” Sukari Industries said.
“It captures a high percentage of sugar in molasses such that no product is wasted, thus making the project more viable and cost-effective. This inevitably results in low production overheads and ultimately low pricing of products at the consumer end” it added.
Another investor, Angata Sugar Mills also plans to set up a Sh4.67 billion ($ 33.8 million) sugar milling plant in Moyoi in Transmara, Narok county. The factory and its auxiliaries’ plants or installations will be located on about 200 acres of land. Angata Sugar Mills Limited is owned by two different equity groups, Firethorn Holdings Limited, and iCreate Investment Holdings Limited.
Transmara is also set to host a Sh1.5 billion Soit Sugar Factory within the Olomismis area. A blueprint showed that the Soit factory will have a milling capacity of 1,250 TCD, expandable to 2, 500 TCD, and with the potential to generate three megawatts (MW) of captive power.
“Mill white or mill brown sugar production from the initial Installed plant capacity of 1, 250TCD will be about 138 mt (metric tonnes)/day 3250 mt/month,” Soit Sugar said.
It said the operational phase of the project will involve the production of mill brown sugar with bagasse and molasses being produced as by-products. Other by-products will include filter mud and boiler ash.
“Main inputs will be sugarcane, water, bagasse, and electricity. The by-products generated from the sugar plant, such as bagasse will be utilised in the mill and co-gen power plants, and also the excess of it can eventually be used to make paper or chipboards (expansion into other industry)” Soit added.
In Nandi County, investors have lined up the construction of a Sh357.8 million Tiryo Sugar Mill in the Tinderet area along the Nandi Hills- Kimwani Road with a capacity of 1,000 TCD. A blueprint of the project showed the factory will start with a milling capacity of 800TCD and will include a 45 kilolitre per day distillery and a 5MW co-generation plant.
The neighbouring Kericho is set to host West Valley Sugar Company whose new Sh2.8 billion milling factory is scheduled to start trial runs in August this year with the hope of official commissioning in October.
The West Valley factory will have an initial installed capacity of 1,250 TCD that would be doubled to 2,500 tonnes and will cover Soin-Sigowet, Ainamoi, Kipkelion, Tinderet, Muhoroni, and Nyando sugar belts. The project is a subsidiary of Kipchimchim Group of Companies, a family-owned business with over 20 multisectoral companies under its stable.
In Alego, Siaya County an investor Seal Sugar Limited has lined up a new factory that will have an initial capacity of 1,250 TCD that will be expanded to 2,500 later on. It does provide the estimated capital for the project but industry figures show it will involve a minimum of Sh300-500 million.
“The project shall also incorporate major land use change in the area involving sugarcane development in partnership with the local farmers through leases. It is projected that an estimated 18,400 acres of land will be under sugarcane when the project is in full operation” the company said.
But it is not just investments in the greenfield factories alone. Butali Sugar Mills Limited in Malava, Kakamega County plans a Sh1.3 billion expansion of its existing factory.
“The proposed project will involve the extension of the existing sugar mills plant from a capacity of 2,500 TCD to 5,000 TCD. Specifically, the proposed extension seeks to increase the size and scope of the cane yard, pre-mill, and milling lines to be able to meet the new TCD” the company said.
In addition, Butali will make minor modifications to modernise equipment in the existing factory to work in sync with the new sugar mills, install a power turbine and steam boiler of capacity 12MW and 70TPH (tonnes per hour) respectively to meet the increased energy demand for sugar production.
“The sugarcane will be sourced from local farmers and neighbouring counties,” it said.
Latest data by the Sugar Directorate showed that the total sugarcane milled by all factories in the country dropped to 716,274 tonnes in February, down from 908,537 tonnes the previous months—reflecting a shortage of the raw material amid a biting drought.
