Rai Group’s $300 million investment project would see the Mauritian
agro-forestry firm become the second sugar manufacturer in the country.
PHOTO | CYRIL NDEGEYA | NATION
Rwanda will have to wait longer for a second sugar manufacturer
after plans by Mauritian agro-forestry firm Rai Group to set up shop in
the country stalled.
The agreement for the $300
million investment project, which also involved development of an
8,000-hectare sugar plantation, was supposed to have been signed in
January 2017.
Negotiations
Rwanda Today
understands that negotiations between the prospective investor and
government are still ongoing and nothing has been agreed on as yet.
“The
project is still on the books. Negotiations are yet to be concluded,
but we shall let you know as soon as something concrete is determined,”
said Rwanda Development Board’s chief operating officer, Emmanuel
Hategeka, in response to our enquiries.
Annette
Karenzi, the director-general for Industry and Entrepreneurship at the
Ministry of Trade and Industry also said that despite the delays,
negotiations were ongoing.
“The deal is still on, but there have been back and forth
negotiations because the investor had a lot of conditions. Right now the
file is with RDB,” she said.
Sticking point
According
to Ms Karenzi, a major sticking point was the fact that the investor
was not ready to buy land for the project upfront. Also, RDB was yet to
complete a due diligence on the investor, which the Ministry of Justice
would base a decision to approve the proposal.
Ms Karenzi said expropriation of land would only start after the formalities are completed.
Another
source familiar with the project said the deal has been challenging
because it involves a massive resettlement programme to free the 8,000
hectares proposed for the sugar plantation.
Rai Group
had initially wanted 10,000 hectares, but the government guaranteed to
avail 8,000ha in the eastern districts of Kayonza and Kirehe.
The source said there had also been some foot dragging on the part of government institutions involved in the deal.
“All the government institutions that are supposed to work together to conclude the deal have not worked in tandem to conclude the business,” said the source.
“All the government institutions that are supposed to work together to conclude the deal have not worked in tandem to conclude the business,” said the source.
Monopoly
This
deal was expected to end the dominance of Madhvani group-owned Kabuye
Sugar Works, which has a monopoly in the country’s sugar production.
The sugar deficit in the country has been widening as demand increases and is currently estimated at 90 per cent.
“Rwanda
consumes about 100,000MT of sugar per year and Kabuye Sugar Works
produces around 11,500MT per year. The market still needs more
production to counter sugar imports,” said Ms Karenzi.
The
country spends $45 million a year on sugar imports, which without
intervention are projected to grow to 160,000MT tonnes by 2020.
The Madhivani Group is in the process of expanding installed capacity from 14,000MT to 21,000MT per year.
Rai
Group already has sugar operations in Uganda, where it controls 70 per
cent of Kinyara Sugar Works — the second largest sugar producer in the
country — and has also recently developed Hoima Sugar Factory.
Power generation
Both
Kabuye Sugar Works and Rai Group are eyeing power generation and
ethanol production from the by-products of sugar processing to add 25
megawatts to the national grid.
Experts argue that the
country’s sugar production targets face the challenge of lack of land.
It will be difficult to push local production beyond 13 per cent without
converting land currently allocated to food production to sugar
production.
Kabuye Sugar Works, which for years was
growing cane on a paltry 2,700ha on the banks of the Nyabarongo River
has been asking for an additional 7,000ha to double its production.
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