Kakamega County opposes Liquidation of Mumias Sugar

Kakamega County opposes Liquidation of Mumias Sugar

September 25, 2019 0 By mykenyancareers
MUMIAS SUGAR - Kakamega County opposes Liquidation of Mumias Sugar
Deputy Governor Phillip Kutima has asked KCB to consider recalling the move to pave way for a consultative process of reviving the debt-ridden miller/FILE

NAIROBI, Kenya, Sept 25 – The County government of Kakamega has opposed the liquidation of Mumias Sugar less than 24 hours after Kenya Commercial Bank placed the cash strapped miller under receivership.

Deputy Governor Phillip Kutima has asked KCB to consider recalling the move to pave way for a consultative process of reviving the debt-ridden miller.

“On behalf of the Governor Wycliff Oparanya, I wish to inform and reassure the public that we have engaged our legal team to begin discussions with KCB to ensure a smooth and seamless revival of Mumias Sugar company,” Kutima said.

At the same time, Senator Cleophas Malala has asked the National Government to intervene and implement the recommendations offered by the sugar task force report, before placing the company under receivership.

“We will not allow any step to be taken as far as the receivership is concerned before the sugar task force report is released and handed to the president to pave way for the implementation of the measures outlined,” Malala said.

The report was validated in April, despite opposition by farmers on some sections.

Late last year, President Uhuru Kenyatta ordered the Ministry of Agriculture to relook cane and sugar pricing mechanisms, review importation and taxation structures, and get consensus on the fate of State-owned millers.

On Tuesday, KCB also announced the appointed PVR Rao of Tact Consultancy Services as the sugar company’s receiver manager.

Mumias sugar has defaulted to pay up the Sh12.56 billion loan it owes creditors, among them KCB, Ecobank Kenya and Commercial Bank of Africa.

In January, the three banks recalled the Sh2.6 billion loans they had disbursed to the insolvent firm, breaking ranks from other lenders, including French investment fund Proparco, who are owed Sh9 billion.

The company’s current liabilities exceeded its current assets by Sh21 billion for the year ending 30th June 2018, compared to Sh15.2 billion in 2017.

During the period, the company incurred a loss of Sh15.1billion, compared to Sh6.7 billion in 2017, attributable to acute cane shortage and loss of farmer loyalty which led to low production and underutilization of the factory operations.

Earlier this month, Kenya Revenue Authority issued a notice to bankers restricting transactions on accounts of the miller, with hopes of recovering Sh10 billion in unpaid taxed.

According to KRA, the amount has been outstanding since 2012.