Ailing KMC allocated Sh700m by Treasury

Corporate News

A KMC factory. It has been allocated less than a quarter of the money the ministry had sought in the financial year 2014/2015. Photo/FILE 

By GERALD ANDAE

In Summary

• Part of the allocation would be used to acquire new machines that would replace the obsolete ones that hamper efficiency.
• KMC plans to trim its 10-member board of directors and staff to cut down on expenditure.
• KMC mainly serves the local market where it has faced stiff competition from private abattoirs.

The Treasury has allocated the Kenya Meat Commission Sh700 million for the revival of the ailing Athi River-based factory in the 2014/15 budget.

This is less than a quarter of the Sh3 billion that the ministry had requested in 2014/2015 for revival of the State abattoir.

Clearing farmers’ debts as well as settling amounts that the firm owes financial institutions had topped the budget of the abattoir at the time of presenting the estimates.

Part of the allocation would be used to acquire new machines that would replace the obsolete ones that hamper efficiency.

“The only way to improve productivity at KMC is by replacing the machines that are currently in use with modern ones,” said Livestock principal secretary Khadijah Kassochoon.

Last month, the Department of Livestock started the process of clearing debts owed to farmers by setting aside Sh40 million, indicating that it would pay farmers before the end of this month.

READ: Fresh bailout for Athi-River’s State owned meat firm

KMC reopened in 2006 after a 15-year shutdown with the government injecting billions of shillings into the plant, including paying National Bank Sh5.2 billion it had guaranteed the factory.

Apart from the Sh98 million that KMC owes farmers, it is also indebted to Family and First Community banks, which had stepped in to ease the plant’s liquidity problem. The firm has also planned a raft of measures to curb the growing wage bill.

Trim
KMC plans to trim its 10-member board of directors and staff to cut down on expenditure.

READ: KMC to trim its board and staff in cost-cutting plan

During this financial year, the government issued a Sh300 million grant to the meat processor to facilitate the purchase of livestock from the drought-stricken areas.

Last year, farmers had threatened to move to court to recover millions of shillings owed to them following the delays by the firm to pay for their supplies.

Through their lobby, the Kenya Livestock Marketing Council (KLMC), the farmers accused the parastatal of failing to fulfil its promise of clearing outstanding debts before the end of August last year.