KENYA: Fresh hopes for privatisation

Published: 03/13/2018, 7:43:17 AM

The Government will only write off sugar millers' debts amounting to KES89 billion under the framework of the planned sale of five State-controlled factories, Treasury has said, according to Kenya's Standard newspaper.

This emerged as a final roadmap for planned privatisation was laid out in Kisumu Monday.

Although Deputy President William Ruto had announced Government plans to settle the debts that have continued to dog the KES55 billion (US$542.9 million) industry, Treasury's Investment Secretary Esther Koimet told stakeholders that the Exchequer could only release the funds towards a holistic approach to save the industry.

Koimet, who represented Treasury CS Henry Rotich during a high-level summit to kickstart the process, said the other option would be to have Parliament deliberate the "dissociation of debt write-off and bailout from the privatisation process."

She said whereas debt pile-up was weighing down productivity of the millers, bailout was a temporary solution that would not yield much if isolated from efforts to fix problems bedevilling the sector that supports nearly 250,000 farmers.

"If we write off debt before agreeing on the process, debt will continue to accrue," she said. The Privatisation Commission was meeting governors from Bungoma, Kisumu, Kericho, Migori and Nandi as well as top-level stakeholders from the region in line with resolutions to restart the sale process.

The ministries of Agriculture and Devolution as well as the National Land Commission (NLC) were represented. The meeting was the first public participation following resolutions by the Intergovernmental Business and Economic Committee (IBEC) chaired by Ruto to iron out issues slowing the process.

The action plan, drawn during last week's special IBEC meeting, resolved that contentious issues be tackled and implemented by technical committees.

Issues raised include the fate of a 25 per cent stake reserved as a fall-back measure by the national government, gazettement of sugar regulations, debt write-off plan, and ownership of the land on which the factories stand.

IBEC has tasked Treasury and the Privatisation Commission with formulating a revenue sharing plan to split the reserve shares between the two levels of government. NLC has been roped in to conduct land searches and audit in the sugar belt, with the aim of classifying the parcels and reclaiming those in the wrong hands. This is in response to Council of Governors' concerns that land should be communal, held in trust by the counties.

NLC chairman Muhammad Swazuri said they had not been not involved in previous consultations, but committed to sort out the mess within two weeks.

Regarding the huge debts, Treasury and Privatisation Commission are expected to file a report detailing a write-off and bailout plan within the privatisation framework.

According the Privatisation Commission, Nzoia is the most indebted miller at KES38 billion as at the end of June 2017. Muhoroni, which is in receivership, owes KES9.5 billion, defunct Miwani KES5.8 billion, Chemelil KES3.3 billion and Sony KES1.8 billion. Together with KES23 billion tax arrears and KES6 billion owed to creditors, the total debts amount to KES89.3 billion.

And although the governors seemed to have welcomed the new trajectory, Migori Governor Okoth Obado, who chairs the Council of Governors Agriculture Committee, said there were questions that needed to be exhaustively answered if the process was to succeed.

The summit also sought the approval of stakeholders to embark on the planned factory-to-factory meetings to gather views on the proposed sale of the millers. The sale, according the Privatisation Commission, will be done on a miller-by-miller basis.