Nzoia Sugar reeling under Sh32bn debt

Nzoia Sugar Company is reeling under a debt of more than Sh32 billion, the Public Investments Committee was told on Wednesday.

Kenya National Audit officials told the committee that, going by the cost of operations, the factory was cash-strapped and had not been in a position to break even and was unlikely to do so in the near future.

They told PIC that the sugar firm owes Sh11 billion as outstanding loans, Sh8 billion as interest on the loans and another Sh12 billion in other debts.

The farmers who supply the factory with sugar cane are owed Sh430 million among other debts. The details of the firm’s precarious financial position were laid out before a meeting scheduled with the managing director and the top management, who showed up late.

PIC chairman Adan Keynan said the team “wants to find out what contributed to this mess.”

“We have a company right now that has a debt portfolio of about 32 billion shillings,” said Mr Keynan.

The auditors said the Kenya Sugar Board and the National Treasury lent the sugar firm Sh554 million and Sh980 million respectively. It then took Sh9.8 billion loans guaranteed by the government.

The first of these debts was taken in 1981.

Mr Keynan said the committee would visit the factory and then organize meetings with the KSB, managements of Nzoia factory and West Kenya Sugar Company.

The chairman said West Kenya is accused of stealing cane from Nzoia, depriving the firm of the opportunity to make sugar, and farmers the chance to make money off their produce.

“Somewhere along the line West Kenya was formed and now there are accusations of sugar poaching,” said Mr Keynan, the MP for Eldas.

But Mr Francis Nyenze (Kitui West) said that poaching was not the problem.