The government plans to lease Chemelil, Miwani, Muhoroni, Nzoia and South Nyanza Sugar companies for a period of between 15 and 25 years in an effort aimed at restoring the struggling State-owned sugar mills.   

Agriculture Cabinet Secretary Peter Munya says that despite the challenges faced through a court injunction, the government is making headway with the leasing exercise.

 “The process of Expression of Interest attracted 30 investors from across the globe. The evaluation committee reduced them to only 15 viable potential investors. The next step is now to have the 15 companies submit their proposals”, Mr Munya told NTV’s Business Redefined.

Mr Munya rejects the thinking that through the leasing, the Ministry of Agriculture has usurped the powers of the Privatisation Commission. Following that route, the Cabinet Secretary says, would have undermined the government’s ability to salvage whatever is remaining of the mills caught in financial distress.

Kibaki era

 “Privatisation of these mills has been an agenda from as far back as the [Mwai] Kibaki era but it has never worked because the way the law is crafted makes it a difficult process. If you look at the privatisation law, however, leasing is identified as one mode of privatisation and so we opted for it,” Mr Munya says.

The government has enlisted the services of the World Bank’s investment arm, the International Finance Corporation, as far as the leasing exercise’s transaction advisory is concerned. It is hoped that upon completion, the leasing will free the government of the burden of deploying taxpayer funds to prop the ailing sugar mills.

“Those mills have been bottomless pits with government sinking money in there yet no one is benefiting. If you consider now, in this leasing exercise we are writing off Sh62 billion of taxpayers’ funds,” he says.

Mr Munya also says that in the Comesa Council of Ministers meeting this month, Kenya has yet again sought another extension of the safeguards on sugar imports beyond the present deadline of February 2021.