President Uhuru Kenyatta is touring Mumias Sugar today, just a few days after realising Ksh1 billion to save the cash starved sugar miller from going under.
Even then, the company still needs Ksh1.3 billion more to clear its debts and stabilise its cashflow. Mumias Sugar Company needs a capital injection of Ksh2.369 billion from the Government to meet urgent financial obligations.
The President is expected to talk tough on the company’s dwindling fortunes and propose a change or strengthening of management. Farmers are hoping the President will outline tough action against those mentioned in in a KPGM audit that showed massive corruption that bled the company dry.
Those mentioned include Nairobi Governor Evans Kidero who, during his tenure as managing director, engaged in single-sourcing of suppliers and approved fake sugar deliveries that cost the company hundreds of millions of shillings. Former MD Peter Kibati, who perpetuated the same culture, has been fired but yet to arraigned in court.
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Even with a new management, Mumias Sugar still faces an uphill task in recovering from its huge losses. Farmers are crying for their pay, as are other suppliers, and operations ground to a halt last week.
The company is seeking capital to finance maintenance estimated at Ksh330 million, to settle Ksh315 million in payment arrears for new farmers, and pay off Ksh1.19 billion owed to suppliers. Mumias is also seeking Ksh480 million to finance additional investments to enhance branding and Ksh50 million to improve distillation efficiency.
The funds are intended to clean its balance sheet as it concludes talks with the commercial institutions it has borrowed money from. Mumias — which posted a loss of Ksh2.7 billion last year, which was worse than the Sh1.6 billion dip in 2013 — has received Ksh902.5 million from the government in the last one and a half years to mitigate its financial challenges.
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