Senators summon CS Kagwe over leasing of state-owned sugar mills, demand full lease agreements
The move that has sparked outrage among legislators and farmers in sugarcane-growing regions.
Senators have summoned Agriculture Cabinet Secretary Mutahi Kagwe to shed light on the government’s decision to lease out four state-owned sugar factories, a move that has sparked outrage among legislators and farmers in sugarcane-growing regions.
The legislators want the CS to appear before the Senate's Standing Committee on Trade, Industrialisation and Tourism and provide full disclosure on the leasing process, including copies of the lease agreements, evidence of public participation, a complete list of the mills’ assets and liabilities, and the specific role played by the Privatisation Commission.
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They are also demanding clarity on whether the leasing aligns with court orders and serves the socio-economic interests of local communities.
The committee, chaired by Kwale Senator Issa Juma, is seeking answers on the controversial 30-year leasing plan that has seen Nzoia, Chemelil, Sony and Muhoroni sugar companies handed to private millers.
Nzoia Sugar Company has been leased to West Kenya Sugar Company, Chemelil to Kibos Sugar and Allied Industries Ltd, Sony to Busia Sugar Industry, while Muhoroni Sugar has gone to West Valley Sugar Company.
Senator Juma said the committee is particularly interested in the documents surrounding the lease and whether the interests of sugarcane farmers and workers were adequately protected in the process.
The summons came just a day after a group of Western Kenya leaders threatened legal action to halt the leasing of Nzoia Sugar Company.
The legislators, including MPs Majimbo Kalasinga (Kabuchai), Tindi Mwale (Butere), and Senators Edwin Sifuna (Nairobi), Godfrey Osotsi (Vihiga), and Okiya Omtatah (Busia), accused the Ministry of Agriculture of flouting court orders and locking out key stakeholders from the process.
Senator Omtatah raised concerns over the lack of adequate public engagement before the decision was made.
“What is the impact of leasing out the sugar companies on farmers, employees, and local economies, and the safeguards in place to protect public assets and ensure continued service delivery and economic empowerment in sugar-growing regions?” he posed.
Senator Sifuna criticised the opaque nature of the leasing, stating that the rush to lease the mills despite ongoing litigation and without effective consultation was alarming.
“If you are leasing out the sugar mills, and the person is not interested in reviving the mills, but is only after the land owned by that particular sugar plant, there is going to be a problem,” he said.
He added that Bungoma farmers were clear that when it comes to Nzoia Sugar, the government should invest in upgrading the machinery to improve efficiency, instead of leasing it out or selling it.
“Nzoia Sugar has the biggest nucleus, and the people of Bungoma will not allow that land to be taken because they consider it their land,” he said.
Senator Osotsi echoed these sentiments, saying the public was blindsided by the move.
“The process was done opaquely. Even if the Government has good intentions on doing something, can they involve the people and leaders of that region, instead of just waking up and saying they want to lease Nzoia Sugar Company?” he said.
“I am among the people who believe that privatisation is not the solution to the problem we are having in the sugar industry. Mumias Sugar Company was doing well before privatisation. The problems started increasing upon the privatisation of Mumias Sugar Company, where the management could not listen to anyone. The solution is not the privatisation of sugar companies. I wonder why the Government keeps interfering with the sugar industry.”
Nandi Senator Samson Cherargei said senators want the leasing process to be transparent and consistent with ongoing court proceedings.
“I request the Government not to be in a hurry because there will be a lot of legal hurdles that might affect this process,” he said.
He also urged for the inclusion of Nandi in the leasing framework for Chemelil Sugar Company Limited and West Kenya Sugar Factory.
Kakamega Senator Boni Khalwale dismissed the leasing consultations as inadequate, citing the example of Nzoia Sugar where, he claimed, only the Bungoma Governor and the Speaker of the National Assembly were consulted.
“Consulting those two leaders does not amount to public participation over Nzoia Sugar Company. I speak for 1.8 million people. These two leaders have accepted the factory to be leased to a guy called Rai, who took over Webuye Pan Paper Company. We refuse again and again,” he said.
Despite the criticism, the Council of Governors (CoG) led by its Chair, Ahmed Abdullahi, Vice Chair Mutahi Kahiga and Agriculture Committee Chair Ken Lusaka, urged stakeholders to give the reforms a chance.
President William Ruto harvests sugarcane during the launch of the issuance of bonuses for sugarcane farmers, Mumias, Kakamega County on January 20, 2025. (Photo: X/Kimani Ichung'wah)
“As a council, we support the leasing and privatisation of public sugar companies. We see privately managed sugar companies making significant profits,” Ahmed said.
“If private management can turn around hefty losses and bring in efficiency, why block the government from doing it? Those opposing it are doing so for political reasons.”
Ahmed said the leasing aims to increase the profitability of the sugar sector and reduce dependency on imports, thereby preserving foreign exchange.
“The leasing will save on the forex used to import sugar,” he said, adding that due process had been followed.
Agriculture CS Mutahi Kagwe also defended the move, stating that four private millers were competitively awarded 30-year leases after long-standing stakeholder consultations.
“The procurement of the four firms followed broad-based engagement with stakeholders across the sugar sector dating back to the year 2015 when Parliament approved the process,” he said.
Kagwe said the leasing of Nzoia was awarded to West Kenya Sugar Company, Chemelil to Kibos Sugar & Allied Industries Limited, Sony to Busia Sugar Industry Ltd, and Muhoroni to West Valley Sugar Company.
He assured that the leasing process was transparent and that no public land had been sold.
“All assets belonging to the four sugar companies, including land, will remain the property of the national government,” Kagwe said.
“The assets will be leased out to the lessees annually based on the prevailing market rate, with proceeds being collected by the Kenya Sugar Board for reinvestment into communities around the four factories and for utilisation in cane development.”
The CS announced that the Ministry of Agriculture and Livestock Development had secured a Sh12.29 billion investment from the four firms to rehabilitate the sugar mills.
West Kenya Sugar Company will inject Sh5.76 billion into Nzoia, Kibos Sugar will invest Sh4.5 billion in Chemelil, West Valley Sugar will pump Sh1.02 billion into Muhoroni, and Busia Sugar Industry will invest Sh1 billion in Sony Sugar.
In addition, the four firms will pay a goodwill fee totalling Sh521,971,400 for leasing the land. Annual lease fees will support cane development and community welfare.
“The funds will be invested directly into the four mills to ensure that they are operational and can meet their inbuilt threshing and sugar production capacity,” Kagwe added.
“The rehabilitation of the four sugar companies will enable the lessees to operate at optimal capacity, thereby safeguarding employment opportunities and enabling farmers to deliver more cane and increase their earnings.”
He also announced that the Kenya Sugar Board would collect Sh1.5 billion in concession fees based on a rate of Sh4 per kilogram of sugar produced and Sh240 million from molasses at a rate of Sh3 per kilogram. The funds will be distributed to farmers as annual bonuses according to the amount of sugarcane delivered.
To address debt issues, Kagwe said the government had already disbursed Sh1.7 billion to clear farmers’ arrears, with an additional Sh500 million set for release in July.
He also confirmed that the government had committed Sh1 billion to settle workers’ dues in partnership with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW).
“Under the agreement, the government will pay workers Sh600 million to settle part of the staff arrears and Sh400 million to pay salaries for six months starting from May 2025,” Kagwe said.
He added that another Sh1.5 billion would be released in July, followed by quarterly payments of Sh1.17 billion to clear all outstanding arrears.
“The leasing process was transparent, guided by parliamentary approval, and involved thorough consultation with farmers, unions, MPs, and county leaders,” Kagwe reiterated.
“We will share all documents with Parliament and the public. All concerns will be addressed.”
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