Loss-making Mumias Sugar has imported 10,000 tonnes of sugar at a time when there is an oversupply of the commodity.
Just a day after the company’s chief executive Peter Kebati announced a Sh1.7 billion loss for the year ending June 2013, it has been disclosed that the company used a private agent to ship in the sugar.
According to the firm’s agreement with agent Dantes Peak Ltd, the sugar to be imported would rise by another 20,000 tonnes. Mr Kebati attributed the loss to cheap imports, but did not disclose that they, too, imported the commodity through an agent.
The Kenya Sugar Board Wednesday faulted this, saying the import licence was not transferrable.
The firm decided to import the 30,000 tonnes in February, barely a month after it had issued a profit warning for its full year results after chalking a Sh1.1 billion net loss.
The sugar was to arrive in May when the company usually shuts its machines for routine maintenance.
By importing the sugar, the company hoped to retain its market share when it was facing what it termed a “depressed cane supply”.
DIDN;T HAVE ENOUGH CANE
All the millers, the company had argued, did not have enough cane.
Dantes Peak imported the sugar from Sudan’s Kenana Sugar Company. The consignment’s entry number was 4050717 of April 16.
Since the sugar was coming from a Comesa member state, there were no import charges.
According to the Kenya Sugar Board, Mumias requested and was granted a sugar import licence. The licence, the board said, was not transferable to a third party.
“It is wrong if the licence was transferred,” said Busia/Mumias sugar board director Billy Wanjala.
“There is a lot of contraband sugar in the country,” Mr Kebati said on Monday, adding: “This has affected us.”
Yesterday, Mr Kebati defended the imports, saying Dantes Peak facilitated financing of the imports.
“Trading with firms in North Sudan is not easy due to multiple sanctions, especially on transferring money and that is why we looked for Dantes,” he said by phone.
He said the company would not import the additional 20,000 tonnes owing to the sugar glut in the market.
The government stopped issuing import licences to curb dumping of duty-free sugar.
This followed an outcry from KSB that 20,000 tonnes of sugar was at nine local millers, among them Mumias, due to an upsurge in duty-free sugar imports.
Agriculture Secretary Felix Koskei told the board: “No sugar import licence will be issued until a fresh validation is concluded. The suspension would last until local markets stabilise.”
In the last four months, ex-factory prices have gone from a high of Sh5,400 in May to Sh3,800 per 50kg bag in August.
“I have noted that consumers are still suffering high retail prices in excess of Sh120 a kilo,” said Mr Koskei.
Total imports to Kenya since January this year are 147,938 tonnes, out of which 73,243 tonnes were from the Comesa region.
“We are yet to exhaust our available annual quota of 340,000 tonnes,” said the Cabinet secretary, adding that whereas the ex-factory price had also fallen from Sh109 a kilo to Sh80.40, the retail price still averaged Sh120 a kilo.
This, he said, was not benefiting consumers owing to the distorted market prices.
The government also directed all the 11 licensed white sugar millers to submit a list of their distributors and customers to the ministry promptly.
“This would enable the government to closely monitor the distribution, sale and pricing of sugar to avoid undue market distortions,” stated Mr Koskei.