Sugar board meets to decide fate of Butali Sugar Mills

The Kenya Sugar Board (KSB) meets on Tuesday to decide whether to licence Butali Sugar Mills or not.The meeting comes in the wake of a High Court ruling compelling the board to issue the licence.Mr Billy Wanjala, the KSB director in charge of sugar development, told the Nation on Sunday the matter was top on the agenda.

“We shall soon be issuing a comprehensive statement as the board next week after our meeting over the Butali issue and other things we shall have discussed concerning the sugar industry and we call upon growers to be patient,” Mr Wanjala said.

Earlier, KSB chairman Saulo Busolo said in a statement the company would not be given the go-ahead until a case pending in the Commercial Court is heard and determined.

The case was filed by West Kenya Sugar Company (WKSC), which obtained an injunction barring KSB from licensing Butali Sugar.

Among other arguments, WKSC argues that Butali Mills is located within its catchment area. Therefore licensing it would result in cane poaching and contravenes the law, which says that sugar millers must be at least 24km apart.

Mr Busolo said that although the Kisumu High Court had ruled in favour of Butali, ignoring the injunction would amount to contempt of court.

But even as KSB appeared reluctant to implement the ruling, farmers gave West Kenya Sugar Company two days to withdraw the case. They threatened to paralyse its operations starting on Sunday.

Butali Outgrowers Sugar Company chairman William Kopi said farmers will stop cane deliveries and harvesting if the case was not withdrawn in line with a resolution reached between the feuding parties before area DC Gideon Ombogi last week.

The farmers’ push for Butali Sugar to start operations has been dogged by court battles. Speaking in the area recently, Deputy Prime Minister Musalia Mudavadi urged KSB to speed up the licensing process, arguing that the delay was hurting farmers, who had taken loans to invest in sugarcane.

Most of the farmers, he said, had a mature crop that would go to waste if not harvested in time. This, he warned, would trigger a chain of negative reactions, including property auctions over loan arrears.

Meanwhile, the High Court ruling two weeks ago pointed to serious failures of the board. Butali Sugar Mills moved to court, arguing that it was licensed to build a milling plant, but could not start milling without an operating licence.

The board seemed to support the position of WKSC, which was opposed to Butali being allowed to start milling. In his ruling, Justice Joseph Karanja criticised the board, saying, the court was not interested in business rivalry or sugar wars between Butali and West Kenya Sugar.

He blamed the protracted dispute on what he termed an “unpleasant state” of the board. The judge said the regulator could not escape its statutory responsibility.

“It could not hide behind a cloak of court cases and must be made to bite the bullet and must remove itself from the muddle it has created without causing damage and suffering to the players in the sugar industry, including the sugar millers and sugarcane farmers,” Justice Karanja said.

In October, Agriculture permanent secretary Romano Kiome suspended KSB chief executive Rosemary Mkok for, among other things, confusion over the Butali Mills licensing.

This was followed by a boardroom coup, where chairman Okoth Obado was sacked by fellow directors. Agriculture minister Sally Kosgei on Tuesday told Parliament that while Ms Mkok was aware of KSB’s letters barring Butali from erecting a sugar mill, she attended the laying of the foundation stone on December 5, 2007.

However, when she returned to Nairobi, she wrote to the company barring it from continuing with the project. “And in January 2010, she wrote to Butali again to say no registration certificate would be issued,” Dr Kosgei told MPs.

“A month later she wrote again to say registration certificate would be issued and so that is why courts took over,” the minister told the House.

The minister said Ms Mkok and the chairman were sent home on recommendations of the Efficiency Monitoring Unit. The probe team found the board was unable to conduct business and had put the government at risk through litigation.

It recommended that the services of the board chairman, Mr Obado, be terminated by the appointing authority. “The judge in Kisumu last week in his judgment also issued strong criticism on the manner in which the chief executive officer of Kenya Sugar Board and the board acted,” Dr Kosgei told Parliament.

“Two private companies are fighting — Kenya Sugar Board all along acted inconsistently and that is why there are cases galore in the courts.”

source: nation