Investors to Inject Ksh12.29 Billion in Leased Sugar Factories, says Kagwe
Agriculture cabinet secretary Mutahi Kagwe addressing a section of county governors in Mombasa . (Photo/ Courtesy)
By Harrison Kivisu
Email, thecoastnewspaper@gmail.com
Kenya has secured a Ksh12.29 billion investment to revive Nzoia Sugar, Chemilil Sugar, Sony Sugar, and Muhoroni Sugar.
Agriculture cabinet secretary Mutahi Kagwe, speaking after meeting a section of county governors in Mombasa on May 15, 2025, said the funds would be invested directly into the four mills to ensure that they were operational and could meet their inbuilt thrashing and sugar production capacity.
The CS said the investment would be made by four companies that were awarded 30-year leases to revamp the mills and secure earnings for farmers and sugar factory workers.
“West Kenya Sugar Company, which won the lease for Nzoia Sugar Company, will invest Ksh. 5,764,331,333 into the factory. Kibos Sugar & Allied Industries Ltd, which won the lease for Chemilil Sugar Company, will invest Ksh4.5 billion into the factory.
West Valley Sugar Company Ltd, which won the lease for Muhoroni Sugar Company, will invest Ksh1.023 billion into the factory. Busia Sugar Industry Ltd, which won the lease for Sony Sugar Company, will invest Ksh1 billion into the factory,” he said.
Mr Kagwe said rehabilitation of the four sugar companies would enable the leasees to operate at optimal capacity, thereby, safeguarding employment opportunities and enabling farmers to deliver more cane and increase their earnings.
“In addition to the Ksh12.29 billion, the four leasees will pay a total of Ksh521,971,400 million in goodwill for the leasing of land belonging to the four mills,” he added.
According to the minister the payment is calculated based on the annual cost of leasing land per hectare.
The costs are broken down as follows: West Kenya Sugar Company will pay a goodwill of Ksh208,305,000 million for the 4,629 hectares owned by Nzoia Sugar Company, calculated at a rate of Ksh45,000 per hectares.
Kibos Sugar & Allied Industries Ltd will pay a goodwill of Ksh111,190,000 million for the 2,779.75 hectares owned by Chemilil Sugar Company, calculated at a rate of Ksh40,000.
Busia Sugar Industry Ltd will pay a goodwill of Ksh122,396,400 million for the 3,059.91 hectares owned by Sony Sugar Company, calculated at a rate of Ksh40,000 per hectares.
Others are West Valley Sugar Company Ltd will pay a goodwill of Ksh80,080,000 million for the 2,002 hectares owned by Muhoroni Sugar Company, calculated at a rate of Ksh40,000 per hectare.
He confirmed that beyond the over Ksh522 million to be paid on goodwill, the four leasees will pay an annual lease for the land owned by the four factories at the beginning of each year.
The funds will be invested in cane development and cater for the welfare of communities living around the factories.
The government will also use the funds to offset unpaid dues owed to farmers and sugar factory workers.
The Kenya Sugar Board (KSB) will also collect Ksh1.5 billion concession fees at a rate of Ksh4,000 per ton (Ksh4 per kg) of sugar produced and Ksh240 million concession fees at the rate of 3000 per ton (Ksh3 per Kg) of molasses produced.
The funds will be paid back to farmers in the form of annual bonuses based on the amount of sugar supplied by each farmer to the factories.
The government has already paid out over Ksh1.7 billion to sugarcane farmers to clear arrears owed to them by sugar factories.
Since then, the factories have accrued Ksh500 million for cane delivered by farmers, which the government has committed to pay in July this year.
Further the government has entered into an agreement with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW) to safeguard the interests of sugar factory workers.
Under the agreement, the government will pay workers Ksh600 million to settle part of the staff arrears and Ksh400 million to pay salaries for six months starting from May 2025.
The government has also committed to settling all arrears owed to workers through a phased payment plan.
Under the plan, the government will pay Ksh1.5 billion to workers in July and make quarterly payments of Ksh1.17 billion to settle all arrears owed to workers in the four factories.
“I would like to assure farmers, workers, and members of the public that no sugar factory has been sold.”
The factories have been leased as per the process approved by Parliament.
Following the process set out by Parliament, various stakeholders were consulted before leasing was selected as a viable model.
