This archive report was first published on 3 December 2019.
December 3, 2019
Chemelil Sugar Company's indefinite closure in March this year has left thousands of locals in the Nyando sugar belt facing a bleak future.
The factory's shutdown has resulted in a significant decline in business activities in the surrounding towns, including Chemelil, Miwani, Kibigori, and Kopere.
More than 20,000 contracted farmers from Nandi and Kisumu regions who supply cane to the miller and businesses in neighbouring towns have been affected by the closure.
Traders in the area have reported a significant decline in sales, with many struggling to restock their goods due to the lack of cash flow.
Chemelil Managing Director Gabriel Nyangweso attributed the factory's woes to a shortage of raw material and the failure to raise sufficient operating capital to offset workers' dues amounting to Sh845 million as at the end of July this year.
The miller has about 800 permanent employees and 470 contracted workers, with Sh152 million in retirement benefits and terminal dues, and Sh438 million in gross staff salary arrears.
Chemelil Sugar uses 16 tonnes of sugar cane to produce a tonne of sugar, while optimally, about 10 tonnes of the cane should be used to produce the same amount of sugar, according to MD Nyangweso.
The company spends about Sh106,396 to produce one tonne of sugar, which rakes in about Sh68,880 averagely, making its operations untenable.
Kisumu Governor Anyang' Nyong'o proposed that the management of the State-owned factories reverts to the counties, stating that there is no economic rationale for seeing the sugar industry collapse.
Chemelil, which last made a profit in 2001, is hoping for a Sh258 million bailout.
Chemelil Sugar factory owes creditors Sh6.1 billion, while Muhoroni Sugar Company is indebted to the tune of about Sh24 billion.
