The government has has waived Sh 11 billion in tax arrears the troubled Mumias Sugar Company owes the Kenya Revenue Authority (KRA), according to Kakamega governor Wycliffe Oparanya
Oparanya who co-chaired the Kenya Sugar Taskforce with former agriculture Cabinet Secretary Mwangi Kiunjuri said the government had further agreed to waive Sh300m owed the agency by Bungoma based Nzoia Sugar Company.
KRA stopped Mumias from producing ethanol in April demanding payment of the debt. The company is currently under receivership by the Kenya Commercial Bank over a Sh12 billion debt.
"Negotiations are ongoing to have other debts the companies owe government agencies and other institutions like Kenya Power written off to facilitate the revival plan," Oparanya said.
Debt waiver was one of the recommendations made by the task-force.
But Mumias Sugar receiver manager P.V.R Rao yesterday said that he had no communication to that effect.
“We have not received the communication from KRA. The waiver can however not help in the current revival plans because it is for old debts," Rao said.
Rao said that the company has finalised evaluation of requirements for repairs at the mill to restart milling sugar.
“We have done the evaluation and ascertained the material required but importation has become a challenge because of the Covid-19 pandemic. It will cost close to shillings one billion ,” he told the Star on the phone yesterday.
He said that the company had started replanting sugarcane on its nucleus estate.
Oparanya said measures taken by the government were part of the efforts to revive the sugar sector in western region.
Revival of the sugar companies in Western region has been a challenge due to huge debts owed to various institutions, farmers and individuals.
Mumias Sugar Company owes creditors more than Sh23 billion. The company has not been milling cane for the more than 15 months after it closed down due to shortage of raw material and a huge debt portfolio.
It resumed production of ethanol early in the year and was set to restart crushing this month.
Oparanya said that the Sugar Act that will be presented the cabinet by Munya will provide a permanent solution to the industry's woes and streamline running of the sector.
"A legislation will guide revitalisation of the sugar factories alongside streamlining management of the same. The good news is that the Sugar Act is ready and will be presented to the cabinet for approval," he said.
He said the Act allows for privatisation of the state owned sugar factories for effective management. It also allows counties interested in running the factories to take over.