Wamwangi clashes with privatisation team over sugar mills sale

Politics and policy

A section of the Nzoia Sugar Company factory. PHOTO | FILE 

By GERALD ANDAE, gandae@ke.nationmedia.com

In Summary

• Kinuthia Wamwangi, the Transition Authority (TA) chairman, reckons that the Privatisation Commission overlooked the input of the authority in the plan to dispose of the millers.

The planned sale of five State-owned sugar companies has run into legal headwinds after the Transition Authority (TA) said it was not consulted as demanded by the Constitution.

Kinuthia Wamwangi, the TA chairman, reckons that the Privatisation Commission overlooked the input of the authority in the plan to dispose of the millers, adding that it is in breach of the law.

The government will this month ask investors to show interest in buying a 51 per cent stake in Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies to strategic investors.

The sale is expected to be concluded by mid next year, but risks being declared invalid should it fail to get the nod of TA.

“The law requires that we are consulted on the transfer of assets. We have been left out on the privatisation of the sugar millers despite the process being one of our mandates,” Mr Wamwangi told the Business Daily while quoting section 35 of the TA Act.

The section notes that government assets and liabilities should not be transferred during the transition period without the approval of TA.

The transition period ends three years after the first General Election under the current constitution that took effect in 2010.

This means TA has the mandate over transfer of government assets until next March, putting the sale at risk of being stopped by the authority or a petitioner. 

“Any transfer of assets or liabilities made in contravention of subsection (1) shall be invalid,” notes the TA Act.

The Privatisation Commission, which is guiding the sale, says the office of the Attorney- General offered an opinion that it was exempted from article 35 of the TA Act.

“We sought legal opinion from the AG’s office on the sale of these factories,” said the commission’s chief executive Solomon Kitungu without going into details.

The five companies are in urgent need of modernisation to survive competition from the entry of other sugar producers and the impending end to sugar import limits from the Comesa.

Kenya was in February granted a one-year extension to restrict imports from Comesa to enable the country to complete reforms that will make its sugar industry competitive.

Twenty-four per cent of the mills will be reserved for farmers and employees. The government will sell a remaining 25 per cent stake in the five sugar companies in an initial public offering once the factories are profitable. Muhoroni and Miwani, are under receivership.

READ: Five govt-owned sugar firms Sh100bn in debt, report says