Mauritian firm to build Sh16.5 bn sugar factory at Coast

Sugarcane harvesting. Mauritian Sugar giant Omnicane will establish a Sh16.5 billion plant in Kwale in move that will heighten competition in a market that has witnessed a number of new entrants

Mauritian Sugar giant Omnicane will establish a Sh16.5 billion plant in Kwale in move that will heighten competition in a market that has witnessed a number of new entrants.

The company, which is listed in Stock Exchange of Mauritius, would form a joint venture with local investors in Kwale International Sugar Company Limited (KISCOL) — giving it access 17, 000 acres of sugar cane.

It would be the biggest entrant to Kenya’s sugar market and one of the largest foreign direct investment in the country’s agro industry in what could shake the dominance of the sector by Mumias Sugar.

Omnicane’s sales stood at Sh95 billion in 2010 and turned a profit of Sh8.8 billion compared to Mumias Sugar whose net profit stood at Sh2.6 billion on revenues of Sh15.6 billion.
“The project is in line with our vision to consolidate further our presence in the sugar and energy sector.

It will also help in the internationalisation of our operations,” Omicane CEO Jacques d’Unienville told Reuters in an interview.

The new entrant is expected to boost competition in the sugar industry, which is bogged down by high production costs due to use of poor technology and old machinery.

Little opposition

Sugar industry in Mauritius is very competitive due to use of modern technology in production and the firm is expected to replicate this model in the Kenyan market.

The company would rely on its own as opposed to small-scale out-grower farmers for cane supplies, a situation that has worked against efficiency of local firms.

So far, Mumias Sugar has faced little opposition since the new entrants such Kibos, Soin and West Kenya do not much its financial muscle in market where state owned firms Nzoia, Miwani, Sony, Chemelil and Muhoroni are struggling.

Its entry will also complicate the business environment for the local producers as the country removes the 10 per cent duty on imports from least cost producers from the regional Comesa bloc expire in 2012.

Just like Mumias, the Mauritius firm will be looking at new product lines such as power generation and a 30, 000 litre ethanol production plant. Mumias is also looking at a water bottling plant, due to be commissioned in late September.

This comes as Kenya’s sugar sector experiences cane shortages that has seen millers operate below capacity and raised retail prices of sugar to Sh200 per kilogramme over the past two months.

Increased competition is expected in the sugar industry following the entry of investors from one of Africa’s top producers of the commodity, Mauritius.

Leading Mauritian sugar producer, Omnicane, has partnered with a group of local investors in a Sh16 billion integrated sugar project under the flagship of Kwale International Sugar Company Limited (KISCOL).

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