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March 06, 2009

Kenya to write off $588 million sugar industry debt

by Duncan Miriri

Kenya will write off or convert into equity 47 billion shillings ($588 million) debt owed by sugar milling companies ahead of their privatisation, Agriculture Minister William Ruto said.

Five firms in the western sugar belt of the east African nation -- Chemelil, Sony, Nzoia, Miwani and Muhoroni -- are slated for sale in an 8 billion shillings disposal of public assets programme.

"Part of the privatisation exercise will involve us as government writing off that debt or packaging it as equity. We will of course take advice from the transaction advisers," Ruto told reporters.

He said the government would also consider any other options that the transaction consultants recommend.

"We are aware this is an exercise that has been talked about in the last 10-15 years, but... in a year, we should have gotten over this exercise," said Ruto.

Critics say Kenya's sugar industry is plagued by high costs of production and a lack of credit for inputs, leading to low yields. This saddles the country with an annual sugar deficit of about 200,000 tonnes.

Reuters

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