Governors support state’s Sh12.29 billion lease deal to revive four sugar factories
West Kenya Sugar Company will invest Sh5.7 billion in Nzoia Sugar, Kibos Sugar and Allied Industries will put in Sh4.5 billion for Chemelil Sugar, West Valley Sugar will inject Sh1 billion in Muhoroni Sugar, and Busia Sugar Industry will invest Sh1 billion in Sony Sugar.
The Council of Governors has backed the government’s decision to lease four state-owned sugar factories to private companies, which will inject a total of Sh12.29 billion to revive the struggling mills.
The move aims to bring fresh investments to Nzoia, Chemelil, Muhoroni, and Sony Sugar factories, with private millers committing funds to boost production and settle debts owed to workers and farmers.
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Agriculture Cabinet Secretary Mutahi Kagwe announced the investments after a meeting in Mombasa.
West Kenya Sugar Company will invest Sh5.7 billion in Nzoia Sugar, Kibos Sugar and Allied Industries will put in Sh4.5 billion for Chemelil Sugar, West Valley Sugar will inject Sh1 billion in Muhoroni Sugar, and Busia Sugar Industry will invest Sh1 billion in Sony Sugar.
The companies will also pay a total of Sh521 million in goodwill for leasing land owned by the factories, with annual lease fees going towards cane development and community welfare.
Kagwe explained that the funds raised will help clear worker arrears and pay farmers, including Sh1.5 billion in July and Sh1.17 billion in subsequent quarterly payments.
“The four leases will pay a total of Sh521 million in goodwill for the leasing of land belonging to the mills. The payment is calculated based on the annual cost of leasing land per hectare,” he said.
The goodwill payments are divided among the companies according to the size of the land leased.
Council of Governors Chairperson Ahmed Abdullahi expressed support for the leasing plan, pointing to inefficiency in public management of the mills and criticising political opposition.
Bungoma Governor Kenneth Lusaka also backed the move, citing the success of Naitiri Sugar, which is privately run.
Despite the backing, the leasing deal faces opposition from some western Kenya leaders and senators.
The Senate Trade Committee has summoned Kagwe to provide details of the lease agreements, asset registers, debts, and evidence of public participation.
Senators expressed concern over the economic impact on farmers and communities, arguing that the process lacked transparency and may lead to land grabs.
“Decisions of such magnitude must include broad-based public participation; consulting a few leaders is not enough, Senator Boni Khalwale warned.
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