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{
    "id": 349921,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/349921/?format=api",
    "text_counter": 668,
    "type": "other",
    "speaker_name": "",
    "speaker_title": "",
    "speaker": null,
    "content": "Therefore, I came to the conclusion that we need to write off all these debts, so that the Privatisation Commission can go to the next step of trying to privatise and bring in new management and discipline in these sugar companies. Mr. Deputy Speaker, Sir, somebody may ask, what led to this state of affairs? The first reason was policy inadequacies such as price control regime with regard to price adjustments which were not always done on time to cushion the companies from the increasing cost of production. This was the time when we had the price controls. The price of sugar was controlled and even in respect of the cost of production, the Government would impose a certain price; that was the price that the sugar companies were forced to sell at. There was also financing without regard to appropriate labour regulations and ability of the factories to service debts. In my view, this was poor management. Secondly, there was general mismanagement and poor governance that led to the creation of this huge debt burden without any corresponding assets. Mr. Deputy Speaker, Sir, at a meeting held on 14th October, 2010, the Cabinet approved a number of measures that were necessary to revive the sugar industry. These have been enumerated in the Sessional Paper and I will not go through them one by one. In summary, we are saying that we will expedite the privatisation of the five sugar companies to facilitate rehabilitation and expansion. We want to create financially-viable sugar companies to be able to access adequate cane, and also consider the minimum viable size of a factory which we have been given as 29,914 hectares. We want to restructure the sugar companies’ balance sheets through write-off of excess debts, write off of debts to strengthen the balance sheets of the companies to facilitate reconstruction. We want to enforce the regulation on factory zones. The poaching of sugarcane is contributing to this problem. The outgrowers and employees’ investment trust will be formed, so that once these companies are on sound financial footing, farmers should then be able to buy shares in these companies. We want to provide that certain shares must be held on behalf of farmers. Once they are in a position to pay, they should pay then at the same price that the strategic partners buy. The Government will retain about 25 per cent of the shareholding on behalf of the farmers. I am confident that with all these measures, these companies will now start off on a sound financial footing, and they will be able to compete with the sugar companies in Egypt, South Sudan, Sudan and even in far places like Mauritius and Brazil. Mr. Deputy Speaker, Sir, I will not go through the Sessional Paper. It gives out the write-off for each company. For example, there is a write-off of Kshs1.5 billion and another of Kshs1.5 billion. That is for Miwani Sugar Company to Government of Kenya and the Sugar Fund. There is a write-off of Kshs6 billion and another Kshs2 billion due from Muhoroni Sugar Company to Government of Kenya under the Sugar Fund. There is write-off of Kshs21 billion, and almost Kshs1 billion due from Nzoia Sugar Company to Government of Kenya and the Sugar Fund. This was as in June. There is a write-off of another Kshs5.6 billion to facilitate the construction and rehabilitation of sugar mills, new plant and new equipment. Again, this is for Nzoia Sugar Company. The South Nyanza Sugar Company has Kshs3 billion for rehabilitation. Chemelil Sugar Company is Kshs1.3 billion."
}