CS Kagwe: All privatised sugar mills will return to government after lease term

Speaking in Parliament on Wednesday, CS Kagwe said that private leasing imposes strict performance obligations on the private millers, and they are expected to revive the mills to improve milling and recovery rates.

He further clarified that the leased factories are regulated under the Sugar Act, 2024, which established the Kenya Sugar Board (KSB) with wide powers to oversee cane development, harvesting, milling operations and farmer protection.

He added that all millers are also subject to the Competition Act, which restricts any firm from controlling more than 50 per cent of the national market.

“Following the leasing of the four state-owned sugar mills, none of the sugar companies controls more than 50 per cent of the market,” he said, noting that both KSB and the Competition Authority will retain strict oversight of the sector.

CS Kagwe stated that the lease proceeds will directly benefit local farming communities through payment of farmers’ bonuses and investment in cane development, as the Government shifts away from direct mill management to a regulator and enabler role.

The four mills - Nzoia, Chemelil, Sony, and Muhoroni - will be leased for 30 years to West Kenya Sugar Company, Kibos Sugar & Allied Industries, Busia Sugar Industry, and West Valley Sugar Company, respectively.

The lessees are required to invest in massive cane development programmes, rehabilitate and modernise factory equipment, and adopt new technologies to improve milling efficiency and recovery rates.

They must also diversify into cogeneration of power, production of bioethanol and allied products, while ensuring the management and maintenance of nucleus estates and out-grower systems to secure a sustainable cane supply for the factories.

CS Kagwe has reaffirmed that the leasing of the four mills marks a policy shift in the management of public sugar assets, aimed at attracting private capital, restoring production, cutting losses, protecting farmers, creating jobs and returning the industry to profitability.