Reports Leo Odera Omolo.
The deal which was recently entered into between the government an a South African firm for the revival of the closed down Miwani sugar Mills in Nyando district within the County of Kisumu is said by the stakeholders to be suspicious and faulty.
According to members of the cane farmer’s fraternity, the deal is sounding like another Anglo Leasing and Grand Regency Hotel scandals in the offing.
The farmers wants the deal be negotiated afresh and should involved all the stakeholders, including cane farmers within the Miwani zone, out-growers, primary co-operative societies and its terms simplified to the satisfaction of all the stakeholders before its implementation.
The controversial was negotiated and brokered by Parliamentary Committee on Agriculture, Livestock and co-operatives, which is led by the Naivasha MP John Mututho.
A statement put to the news media by the South African Company, which is also said to have a root in the Indian Ocean Island of Mauritius says in part, ”The revival of Miuwani Sugar Company in Western Kenya inched a step close after a committee of parliament approved the Kshs 11 billion investment plan by a south African-based Eaglefin Structure Finance Mauritius Limited.
The South African company has proposed to give 51 per cent of the revived sugar firm’s shares to cane farmers and out-grower societies got the nod of the Agriculture, Livestock and Co-Operatives parliamentary committee.
‘We can now confirm that we will be able to accommodate out-grower community at 51 per cent shareholding, ‘said the statement issued by the company’s managing director Helgaard Muller.
However, this would require the government to underwrite the farmer’s participation through promissory notes that would help the company raise funds externally.
The Sugar [Amendment0 Act stipulates that cane farmers and out-grower hold 51 per cent stake in all sugar companies which are set to be privatized.
The South African company also wants to be allocated extra land for either purchase or on a long term lease of at least 60 years.
The government of Kenya is undertaking the process of privatization of all state-run sugar millers including Muhoroni, Chemelil ,Sonysugar and Nzoia to raise efficiency ahead of the lapse of Comesa safeguard rules which restrict sugar imports into the country.
According to Eaglefin’s plan sugar cane farmers would not pay directly for the share holding, but would have their dividends used to pay the financiers cover a 10-year period.
The model aims to replicate that in the tea and coffee sectors where growers are allocated shares in new ventures and part of the proceeds used to clear their obligations.
In the Miwani case, however, farmers would get full payment for cane deliveries during the term of the loan, foregoing dividends until the debt is fully settled.
Muller said the company would put in place a private insurance that would guarantee the government and external funders of the discharge of the promissory notes and payment.
The company would put in place a private insurance that would guarantee the government and external funders of the discharge of the promissory notes and payment respectively. The South African government would put in place a private insurance provide commercial underwriting of us as minority shareholders of 49 per cent stake to secure 100 per cent external funding from a senior lender,” said Muller.
The firm is said it had made a commitment to its technology suppliers and ente5ed into fixed contracts to start the construction of the new factory as soon as governmen’s approval is granted.
“We are impressed wit the plan especially the modern technology that will be employed in sugar production said Hon John Mututho after the conclusion of the agreement.
According to the industry players, the deal sounded like that which is not very clear and honest, and need some amount of simplification so that the farmers could understand it. It is normally takes between 15 to 20 year for a newly established sugar mill to make profits worth dividends.
The clause that says the South African firm wants to purchase or lease extra land for 60 years also complicate the whole thing. ”Who will be there after 60 year from now? Asked one farmer in Kibos,adding. “It means by then all the present farmers who are expected to be the shareholders would be dead.
The locals wants the government to off-load its shares at the facility and offer it for outright purchase by a credible private firm with sufficient reputation to generate its own funds without involving the farmers in complicated huge debts..
The common and popular opinion is that the government should advertise all the state-run sugar factories in the local and foreign media so that they could attract bids from straightforward and honest buyers from oversea and locally that will go into the purchasing arrangement I a much more simplified deals which does not put the local farmers in many year of debts slavery.
Miwani Sugar Mill one of the oldest Sugar manufacturing firm was first established by an Australian farmer in the year 1927 It has since then changed hands to the various private and public companies after it went burst following the auctioning of most of its movable properties in 1970s. But about 12 years ago, the government became its minority shareholders with a cartel of local Asian businessmen-um-farmers went in went burst as it because apparent that the firm old not clear it debts to the suppliers, farmers, and the workers.
The receivership was meant to be protective one while its books of accounts were to be adjusted. The official receivers managers, however, have stayed for over 12 year dashing the hope of the revival of the facility. But the local community wants the factory to be disposed off in a transparent manner not through kangaroo deals.
All the previous attempt to offloaded Miwani under its privatization programme were thwarted by the cartel of wealthy local Asians who have had hands in its collapse and who frustrated the effort for its privatization perhaps hoping to have it as scraps and .
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