Sugar sector set for major boost as Sh24bn mill project begins in May

Construction of a Sh24 billion sugar factory in Kwale is expected to start within the next four months, providing a major boost to the sector.“We expect the construction work to start before May this year,” said Mr Tadimeti Rao of J.P. Mukherji & Associates.

Mr Rao, who is the lead consultant of the Kwale International Sugar Company Ltd (Kiscol) project, said it would take about 18 months for the plant to be complete and be ready to crush the first bunch of cane.

The factory, which is projected to process 3,000 metric tonnes of cane per day, will also produce 30,000 litres of ethanol every day and 18 megawatts of power.

Of the power generated, 12 megawatts will be fed to the national grid.

Mr Rao said they were currently evaluating companies that had applied to carry out various jobs in the project.

Reviving plantations

The firm has been developing a plantation that is expected to provide sugarcane to the factory.

It is also reviving plantations owned by Ramisi Sugar Company that collapsed more than two decades ago.

It has established an 850-hectare nursery that will provide sugarcane for planting by out-growers and the firm’s nuclear farm this year.

It has also registered 900 outgrowers who will provide 30 per cent of cane in 2012.

The proposed factory is seen as a major boost to the country’s sugar sector, which, according to some industry analysts, is ill-prepared for the Common Market for Eastern and Southern Africa (Comesa) customs rules.

The rules are expected to come into force in February 2012, effectively swinging open doors for cheaper sugar imports into the country.

Currently, Kenya produces an average of 500,000 metric tonnes of white-milled sugar, against a demand of about 700,000 metric tonnes annually, which leaves a deficit of 200,000 tonnes.

This is the deficit that the Comesa window has been servicing and the amount of duty free sugar entering the local market is expected to increase once the safeguards elapse this year.

Planned reforms in the local sugar sector are behind schedule.

Before the expiry of the safeguards, the country was expected to privatise its five debt-ridden parastatal mills in the Western belt – Chemilil, Muhoroni, Miwani, Nzoia and South Nyanza Sugar companies.

The sector is slowed down by ageing infrastructure, high production costs and long maturing cane variety with low sucrose content, among other problems.

The sugarcane in the Western region takes 18 months to mature compared to the 12 months it takes in the Coast Province due to the high temperatures in the region.

Experts say that the natural challenges that could work against Kenya’s competitiveness can be improved by focusing production in the favourable Coastal region.

“The Coast region is a good area to grow cane due to the shorter period it takes to mature and also the higher sugarcane sucrose content than in Western Province,” said Mr Richard Sindiga, the chairman of the Comesa Safeguards Committee in the Ministry of Trade.

Mr Rao said they are aligning the factory with the Comesa rules by investing in modern and cost-effective systems like drip irrigation and new sugar milling technology.

When the government launched the project in 2008, it said that it would provide employment to about 15,000 young people on becoming fully operational and support more than 1.5 million people.

But the idea to set up the factory was mooted in 2006 and targeted different parcels of land amounting to 42,000 acres, which were all charged to the Bank of India as the receiver managers for the defunct Ramisi Sugar Company.

This required government intervention to settle the Ramisi Sugar Company debts and resolve the issue of squatters on the land.

The process took about a year to finalise and Kiscol was finally allocated 15,000 acres of land to develop a nucleus estate and construct the factory.

The rest of the land was allocated to the squatters, some of whom have now registered as outgrowers.

source: nation