Sale of sugar mills to private investors concludes in August

In Summary Privatisation touted as among best ways to improve local production capacity It removes the most important excuse Kenya has used to lock out cheap sugar from regional economies. Kenya has been enjoying safeguards from the Common Market for Eastern and Southern Africa (Comesa) for more than one and a half decades.

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Privatisation Commission chairperson Henry Obwocha. PHOTO CREDIT | SALATON NJAU | NMG

The Privatisation Commission plans to complete the sale of five state-owned sugar mills by August 2018, removing the most important excuse Kenya has used to lock out cheap sugar from regional economies.

The commission said consultation with stakeholders has started and it will last two months.

There after, the bids will be re-advertised for interested parties to apply for a stake in any of the five millers; Sony, Chemelil, Nzoia, Muhoroni and Miwani

Kenya has been enjoying safeguards from the Common Market for Eastern and Southern Africa (Comesa) for more than one and a half decades.

Privatisation was one of the conditions agreed with the Comesa ahead of opening up the market.

“We target August 2018 to have handed these mills to a strategic investor,” said Jacqueline Muindi, acting chief executive officer at the Commission.

Court case

Kenya was given a two-year safeguard extension last year after the country argued before Comesa Council of ministers that the process of divestiture from government mills had been stalled by a court case.

The Council of Governors moved to court in 2015 to challenge the sale citing lack of consultation.

They were also opposed to the formula used in the allocation of shares.

The government plans to sell a 51 per cent stake in the companies to strategic investors and reserve another 24 per cent for farmers and employees.

The government will then sell the remaining 25 per cent in the milling companies through an initial public offering once the factories are profitable.

Retains stake

The 25 per cent has become a bone of contention with governors opposing the State retaining the stake.

Mrs Muindi said the commission will consult governors during a stakeholders meeting and if they fail to reach an agreement, it will move to court to seek direction.

Chairperson Henry Obwocha said shortlisting of the pre-qualified firms, invitation of bids and ultimately announcing the strategic partners will be done once all the due process has been followed.

The privatisation strategy was approved by the National Assembly in 2015 a move that is required to open up factories to strategic partners who will come with financial, technical and operational expertise in exchange for a 51 per cent stake.