Comesa sugar imports threat to industry

Imported sugar from Comesa is off loaded at the port of Mombasa.

The sugar industry faces imminent collapse as no attempt has been made to clean it up a year before Comesa members states start bringing in the commodity duty free.

The sector has been shielded since 2000 when Kenya was allowed to limit duty-free sugar imports to 200,000 tonnes annually.

The measure was put in place to make the industry competitive.

This arrangement was to expire in February 2008 but Kenya asked for more time.

The extension, which ends on January 2012, was granted on condition the government privatised sugar millers.

The government wholly owns Sony Sugar, Nzoia and Chemilil but also has a stake in Miwani and Muhoroni, which are under receivership.

Among conditions issued by Comesa for the extension was the privatisation of all publicly-owned mills.

However, no progress has been made almost three years later.

The Kenya Sugar Board (KSB), the industry regulator, has failed to clean up the sector and has not taken serious measures to redress the lack of competitiveness.

Last week, KSB chief executive Rosemary Mkok was suspended but no reason was given for the decision.

A senior Treasury official, who did not wish to be named because he is not allowed to speak on the matter, said the Cabinet will soon debate the sugar mills’ privatisation.

“The industry is in a mess,” he said. “Attempts to clean up the mess are facing so much trouble because of vested interests,” he added.

Recently, Medical Services minister Anyang’ Nyong’o said if the sugar industry is to be saved, the government must move “with Michuki-like ruthlessness.”

He was referring to a clean-up of the matatu sector in 2003 led by then Transport minister John Michuki.

Mr Nyong’o said although the sugar industry was once a key pillar of agriculture, it had now become a burden to farmers and the government due to mismanagement of sugar companies and poor oversight by sugar state corporation officials.

“If we do not do this as a government we are cooked,” Mr Nyong’o said in a statement. The people of Kenya will not see us as serious about implementing the new constitution.”

As if it does not have enough on its plate, the KSB faces two separate lawsuits filed by West Kenya Sugar Company and Butali Sugar Mills, both in Western Kenya.

Butali wants the KSB compelled to issue it with an operating licence to start milling sugar after it was given the greenlight to build a Sh3 billion plant.

The company says it has finished construction but cannot start milling without a licence.

West Kenya Sugar Company, on the other hand, has sued both the KSB and Butali Sugar Mills.

The company says Butali should not be licensed to operate as the Agriculture ministry confirmed the existence of an exclusive sugar zone in its favour in 2004.

Both cases are pending determination.

source: nation.co.ke