The Kakamega County Government has been given the green light by sugarcane farmers to be the temporary custodian of the ailing Mumias Sugar Company.
Governor Wycliffe Oparanya, who addressed farmers at the factory grounds Friday, said his administration would not sit back and watch the Company’s Board of Directors dispose off some factory assets.
Oparanya, who is also the co-chair of the sugar taskforce appointed by the President to look into sugarcane issues, questioned the Board’s resolve to advertise for bids to lease the company’s assets even before the taskforce report is released.
The assets to be leased include the water bottling plant, the nuclear estate, the golf course, sports ground and the schools.
He said the county law enforcement personnel and the police will guard the factory machinery and premises. He asserted that they are ready to go to court to safeguard the miller.
Last month, the external auditor RSM Eastern Africa disowned the miller’s financial statements for the year ended June 2018, citing lack of evidence to back the board’s claims of a rescue plan.
This means that investors in the company cannot make meaningful decisions based on its disclosures, making it one of the most speculative stocks trading on the Nairobi Securities Exchange (NSE).
RSM said it was yet to confirm Mumias’ turnaround plans, with the company’s woes deepening in the year ended June 2018 when it made a Sh15.1 billion net loss and its net assets turned to negative Sh14.3 billion.
“By the time of concluding the audit, we had not obtained sufficient appropriate evidence that any of the initiatives by the directors to obtain the financial support, that would enable the company to meet its future obligations as they fall due, had been concluded.”
The board of Mumias told shareholders that the miller would be able to continue operating despite its myriad challenges and delays in raising substantial new capital that will help it resume production of sugar and other products on a commercial scale.
In the past, the miller has blamed sugarcane poaching to its woes, which saw its sugar miss from supermarket shelves between August 2016 and October 2017.
According to Mumias Sugar, during the year under review, cane deliveries dropped by 32% from 417,347 tonnes in 2017 to 283,435 tonnes in 2018. Annual turnover also went down from Ksh 2.09 billion to Ksh 1.37 billion.
However, Oparanya added that the task force report is ready and would be presented to the President soon and among other things it recommends the revival of the miller.