NAIROBI, September 24 – The Nzoia Sugar Company will spend Sh6.5 billion to complete a stalled factory expansion programme.
The firm’s Managing Director Mr Francis Oyatsi said on Wednesday that the company\’s expansion programme that was initiated by the government in 1991 had stalled due to lack of funds.
“The expansion programme was meant to double the company\’s cane crushing capacity in order to meet the demand of cane supplied from farmers,” he said.
He added that the stalled programme had made it difficult for the factory to mill all the cane delivered from farmers, causing delays in the harvesting of mature cane with some being harvested after 35-40 months as opposed to the recommended 18 month period.
At the time the programme stalled, there was equipment on site worth about Sh3 billion that has been lying idle for the past 15 years.
“The company has hired a consultant to ascertain the current status of the equipment, most of which had already been put to use in other maintenance areas in the factory, leaving only Sh2.6 billion worth of equipment on site,” Mr Oyatsi said.
"It’s in view of all these challenges that we are positive that the company can get out of its current financial crisis if the outstanding debt of Sh19.25 billion is written off by the Government."
He said the company had made some progress in kick-starting the stalled expansion programme by raising Sh3 billion but added that it was still sourcing for another Sh3.56 billion before finally putting the project back on course.
The sugar firm boss has also urged the Government to surrender titles of Nzoia Sugar Company properties so that they can be used to source funds from financial institutions so as to complete the held up programme. "We are trying out all available avenues to ensure that the programme is completed quickly in order to end the problem of overgrown cane at Nzoia," assured Oyatsi.
The company has a big cane zone with a capacity to produce two million tonnes of cane crop in one season but its limited milling capacity means most of the cane wastes away on the farms. At the moment, the zone has 23,690 hectares under cane, being supplied by 44,573 farmers.
Cane production at Nzoia is currently 1,421,400 tonnes per year. This is against planned milling of 780,000 tonnes per year leaving excess cane of 641,400 tonnes rotting on the farms.
The matter has caused concern among stakeholders with the company recently entering into agreement with Mumias Sugar Company and other neighbouring sugar firms to mill its excess cane and save the farmers from annual losses occasioned by over-mature cane.
“Unless these measures are addressed, the company\’s survival is in jeopardy once the COMESA safeguards are removed. The only source of economic survival for over 44,000 farmers and their families shall be no more,” warns Oyatsi.
On a recent tour of the factory, Agriculture Minister William Ruto announced that he would take Nzoia’s debt matter to the Cabinet with a view to writing it off in order to return the sugar firm to profitability.