Mumias Sugar Company. FILE PHOTO | NMG
The government is proposing retrenchment as a condition for further bailout funds to ailing Mumias Sugar Company
.
Sports
secretary Rashid Echesa said the government will peg any further
support for the miller on substantive plans to reduce the wage bill.
He said the State had offered another Sh1 billion to cater for the retrenchment and Sh1 billion to pay farmers’ dues.
“I
led a team of management and board members of Mumias Sugar to the
office of the Deputy President and we agreed that they have to reduce
employee numbers,” said Mr Echesa.
“The miller needs to identify employees who will be laid off and
retain the most competent and skilled ones for effective service
delivery,” said Mr Echesa.
But he warned that the
money will only be released if the miller presents a concrete proposal
on how the workforce reduction will happen.
Mr Echesa recommended that the firm reduces its workforce which currently stands at 1,400 to 600 workers.
According to Mr Echesa, the 1,400 employees were costing the cash-strapped factory Sh90 million a month in salaries.
He
said the bloated workforce is financially untenable and claimed that
some of the employees were hired through the influence of politicians
yet they were unqualified.
Mumias
brand is unavailable on supermarket shelves while at the Nairobi
Securities Exchange (NSE), it is the only stock trading at below Sh1.
The miller has partially closed production of sugar amid piling losses and cane shortages.
Some
reports have indicated that rogue importers were riding on the brand to
repackage imported sugar using Mumias’ packets, thus threatening
survival of the miller.
Some farmers no longer want to
deliver their cane to the miller which at one time was Kenya’s leading
sugar producer. Other farmers have uprooted the sugar cane in favour of
crops like maize.
The company currently owes farmers
Sh600 million. It needs close to Sh20 billion to pay cane farmers,
banks, employees and the Kenya Revenue Authority (KRA).
For
the firm to return to a stable course and be able to generate its own
revenue, it requires at least Sh5 billion. The government had pumped in
Sh3 billion in a bailout programme.
CEO Nashon Aseka, however, said the wage bill stands at between Sh30 million and Sh40 million every month.
The workers have gone for several months without pay and are demanding arrears of about Sh300 million.
Mr
Aseka said the firm is focused on restarting production and is hopeful
that the government will provide further bailout funds.
“I am hopeful that if we get money, we can to win back the hearts of farmers and this will mark the end of our challenges.
“In
the absence of external support, Mumias will be staring at lawsuits
that could see it end up in receivership,” said Mr Aseka.
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