Why sugar is do or die for the oligarchs

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Why sugar is do or die for the oligarchs


Entrance gate to the Mumias sugar company. PICTURES | ISAAC WALE | NMG

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Summary

  • The events leading up to the 2017 election illustrate how sugar is a do-or-die deal for the oligarchs.
  • In May 2017, the government published a notice in the Official Gazette which opened a window for duty-free imports. This ended up opening the floodgates to Brazilian dirty sugar imports into the country.

The latest news I have gathered on the controversy surrounding the raging court battle over Mumias Sugar Company’s leasing process is a transaction in which a new lender suddenly jumped into the fray buying factory secured loans of ethanol and the cogeneration plant.

The effect of this latest maneuver is that the rights and security over these two key assets have been transferred to a new lender.

This new and disconcerting development raises several questions. First, what value would a reputable lender see in purchasing the loans from the assets under administration?

Considering that the ethanol plant and the cogeneration plant cannot operate without the sugar refinery, is it really wise to take control of these assets while the fate of the company itself remains uncertain?

It’s like buying the kitchen for a big house on a bigger property that’s owned by someone else. It’s a cynical move, if you ask me, because those two factories can’t work right now. The power purchase agreement between Mumias and Kenya Power expired four years ago.

It seems to me that we are going to see more vicious tactics and hostile moves, especially from some lenders with title and rights to ethanol and cogeneration plants.

The multiplicity of cases surrounding the transaction is a sign that the oligarchs fighting for the company are treating the contest as a do-or-die deal.

A small elite of oligarchs maintain control over the sugar supply chain in this country. This small group has tentacles and interests ranging from milling, imports, warehousing and trading.

Indeed, the fight for Mumias is just another outbreak of lingering battles between oligarchs. The sugar cane rush by the millers was particularly messy.

In the former Western Province, Mumias and western Kenya have long fought deadly battles for control of sugar cane areas.

In the Rift Valley, we witnessed battles between West Kenya and Nzoia Sugar. In southern Nyanza, Awendo’s miller, Sony Sugar, is facing a double attack from two younger and more nimble factories, Sukarri and Transmara.

In the Nyando belt, Muhoroni and Chemelil had to fight with Kibos Sugar.

Have you reviewed the list of names of companies bidding to take over state-owned factories under the proposed lease program? Is it any surprise that the same oligarchs fighting for Mumias feature prominently on this list?

The sugar trade is very lucrative. The events leading up to the 2017 election illustrate how sugar is a do-or-die deal for the oligarchs.

In May 2017, the government published a notice in the Official Gazette which opened a window for duty-free imports. This ended up opening the floodgates to Brazilian dirty sugar imports into the country.

More than 450,000 tons of raw, semi-processed and non-health certified sugar have been imported into the country and sold to ordinary buyers.

If you followed the statistics of the Customs Department, you saw that local millers accounted for the largest quantities of dirty products that were imported.

And how did we come to import large quantities of semi-processed Brazilian sugar?

This is a pertinent question because at the time when we allowed imports of lower quality sugar there was a lot of brown sugar in Comesa which was ready to be imported into the country under preferential conditions stipulated in the treaties and the protocols of block trade agreements.

Powerful oligarchs tricked the government into ignoring the Comesa route because Brazilian raw sugar offered bigger margins.

The goods were moved by conveyor belts directly into the holds of the ships and placed directly into 50 kg bags, dumped on the quay, loaded into open trucks, dumped on the warehouse floors and then bagged directly on the Kenyan market. .

To date, no one has been held accountable for the mess. With the election approaching, it should come as no surprise if a duty-free import window is announced.

Rachel J. Bradford