Building of delayed Sh16bn Kwale sugar project set to begin

Construction of the Sh16 billion Kwale integrated sugar project is set to begin after a six-month delay, raising hope of reducing the country’s production deficit.

Kwale International Sugar Company Ltd (Kiscol) said Epco Builders Ltd was mobilising resources to begin construction after winning the contract.

“We had a delay in starting the work because it took longer than expected to award the contract. We had to do a lot of due diligence on the contractors to ensure we have the best hands. We now have a contractor and work starts any time now,” spokesman Hashil Kotecha said.

Construction of the facility, set to be run as a joint venture between Kiscol and leading Mauritian sugar producer Omicane, was scheduled to kick-off in October 2011 and the initial batch of products rolled out by October this year.

Omnicane owns a 20 per cent stake in the project. “We have revised these dates because of the delay in procuring a contractor and now we look up to commissioning the facility in April 2013,” Mr Kotecha said.

The planned factory, with a capacity of 3,000 tonnes of cane per day (TCD), will include a 30,000-ethanol production plant.

The facility will also host an 18-megawatt (MW) power plant run on bagasse, a by-product of cane.

Kenya has an installed factory crushing capacity of 30,109 TCD. Omnicane said it was pleased with the progress of the project which will be funded 50 per cent by debt while equity from both foreign and local investors will make up the rest.

The Kwale project is expected to boost competition is the sugar industry where processors have been bogged down by high production costs due to poor technology and old machinery.

Omnicane’s entry is expected to hand the project a major boost because of the firm’s immense experience in Mauritius where the sugar industry is quite competitive due to high technology use in cane production and processing.

The Mauritian sugar industry is also highly irrigated, boosting yields even in the face of unreliable rain.

Kiscol said it would rely on its own sugar estates as opposed to small-scale out-growers for cane supplies.

A nucleus system is considered advantageous because it allows for planning and steady supply of uniform quality cane.

The country’s largest miller, Mumias Sugar, also plans a Sh24 billion integrated sugar project in the coast’s Tana River District.

The Cabinet and the National Environment Management Authority (Nema) have already approved the project to be jointly implemented with the Tana and Athi Rivers Development Authority (Tarda).

source: businessdailyafrica