Agency accuses AG over sale of factories

What you need to know:

  • TA Chairman Kinuthia Wamwangi accused Prof Muigai of advising the Privatisation Commission that the process, set to start soon, does not require the agency’s input.
  • Last week, the government announced plans to clear the Sh33 billion debt the companies owe it and other creditors, including banks, to make the millers attractive to new investors.

The Transition Authority has blamed its exclusion from privatisation of five sugar factories on Attorney-General Githu Muigai.

TA Chairman Kinuthia Wamwangi accused Prof Muigai of advising the Privatisation Commission that the process, set to start soon, does not require the agency’s input.

He argued that his commission is vested with powers to oversee transition to devolution, take stock of all assets in counties and direct their transfer, either to the national government or other counties.

“The national government does not transfer any assets without TA’s involvement and that should be put on record,” Mr Wamwangi told the Nation.

“This privatisation is happening during the transition period and that is why we dispute the AG’s advice, even though we do no want to fight,” he added.

Mr Wamwangi said TA had the mandate to take stock of the assets of Sony, Nzoia, Chemelil, Muhoroni and Miwani sugar factories before they go into private hands.

He said evaluation of the companies by his commission is important as it will tell whether the factories are being sold at the right price.

“TA must know the assets owned by the factories, value them and know what has been transferred. These companies and their assets belong to Kenyans who in future might want to know what was transferred,” said Mr Wamwangi.

He demanded that the pre-qualification process for the millers must show the assets and liabilities of each firm.

“It is the only way we can tell whether the assets are undervalued. TA also must approve the shareholders before their takeover,” he added.

Last week, the government announced plans to clear the Sh33 billion debt the companies owe it and other creditors, including banks, to make the millers attractive to new investors.

In the plan, the government intends to merge Chemelil and Muhoroni sugar factories to maximise their capacities.

According to a report by Ernst & Young, the five factories, which have suffered years of mismanagement, owe a total of Sh100 billion.

National Treasury Cabinet Secretary Henry Rotich said an additional Sh5.9 billion would be given to the factories for reconstruction.

The government will retain only 25 per cent of the stake it currently holds in the five companies and sell 51 per cent to a strategic investor.

The remaining 24 per cent will be sold to farmers and employees of the sugar companies.

The companies are in urgent need of modernisation to survive competition from the entry of other sugar producers and an impending end to sugar importation limits from Comesa after the end of a one-year extension given early this year.