NAIROBI, Kenya Dec 3 – Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has assured Parliament that every single investment made by private operators in the four state-owned sugar mills will automatically revert to the Government at the end of the 30-year concession period.
The CS said the long-term leases finalized on May is a strategic shift in public sugar management, aimed at unlocking private capital while safeguarding long-term public ownership.
The government leased South Nyanza (Sony) to Busia Sugar Industry Ltd, Nzoia to West Kenya Sugar Company Ltd, Chemelil to Kibos Sugar & Allied Industries Ltd, and Muhoroni to West Valley Sugar Company Ltd.
According to Kagwe, the Government deliberately adopted a model that restores efficiency and protects farmers.
“These leases are not handovers. They are performance-driven concessions designed to revive factories, grow cane, protect farmers and modernise production,” he told MPs.
Terms of Agreement
Under the agreements, investors will pay annual lease rent of KSh 40,000 per hectare for Chemelil, Muhoroni and Sony, and KSh 45,000 per hectare for Nzoia.
They will also pay a concession fee of KSh 4,000 per tonne of sugar and KSh 3,000 per tonne of molasses, plus a one-off goodwill payment equivalent to one year’s lease rent.
Kagwe said the leasing package overing land, buildings, plant and machinery was designed as a comprehensive ecosystem.
“We leased the mills as composite assets. The nucleus estate land and the standing cane were not valued separately, because they are part of the entire operating system,” he clarified.
He emphasised that the agreements impose strict obligations on the operators adding that millers are also required to diversify into cogeneration, bioethanol and other value-added activities to strengthen the industry’s sustainability.
“The lessees must invest in cane development, rehabilitate the factories, modernise technology and improve milling efficiency. These are not optional commitments,” he said.
“Following the leasing of the four mills, no single company controls more than 50 per cent of the national sugar market,” he added.
He further assured Parliament that the Sugar Act, 2024 and the Competition Act give regulators the mandate to prevent any form of market capture.
The CS said revenues from the leases will directly support cane farmers and local communities.
“The proceeds will go into farmers’ bonuses, cane development, infrastructure, and strengthening out-grower systems,” he told MPs.
On the thorny Miwani Sugar Company land dispute, Kagwe described it as a legally entangled matter. He disclosed that the Cabinet has directed his ministry and the Attorney General to pursue an amicable settlement with Crossley Holdings Limited.
“We are dealing with two conflicting court judgments over the same parcel of land. This is unprecedented,” he said. “Our goal is to safeguard public interest and unlock that land for productive use,” he said.
