Kenya secures US$95.09M to revive four major sugar mills under 30-year lease agreements
Revival of Nzoia, Chemilil, Sony, and Muhoroni Sugar companies begins with strategic investments and plans to repay farmer and worker dues.
KENYA – The Ministry of Agriculture and Livestock Development has secured a Kes 12.29 billion (US$95.09M) investment aimed at reviving four state-owned sugar factories—Nzoia Sugar, Chemilil Sugar, Sony Sugar, and Muhoroni Sugar—through long-term lease agreements with private companies.
The 30-year lease arrangements involve four companies tasked with rehabilitating and operating the mills to full capacity.
The agreements are part of broader government reforms aimed at improving productivity, boosting farmers’ earnings, and protecting jobs in the sugar industry.
Investment breakdown
Under the lease agreements, West Kenya Sugar Company will invest Kes 5.76 billion (US$44.6M) in Nzoia Sugar Company. Kibos Sugar & Allied Industries Ltd. will channel Kes 4.5 billion into Chemilil Sugar Company.
West Valley Sugar Company Ltd. will inject Kes 1.23 billion (US$9.5M) into Muhoroni Sugar Company, while Busia Sugar Industry Ltd. will commit Kes 1 billion (US$7.7M) to Sony Sugar Company.
The funds will be directly invested in rehabilitating machinery, resuming operations, and increasing sugar production.
The upgrades will enable the factories to operate at their full threshing and milling capacities, which is expected to secure jobs and provide better returns for sugarcane farmers.
Goodwill payments and annual leases
In addition to the core investment, the four lessees will pay a combined goodwill amount of Kes 521,971,400 (US$4.04M) for leasing the factories’ land, based on per-hectare rates.
West Kenya Sugar Company will pay Kes 208,305,000 (US$1.6M) for 4,629 hectares belonging to Nzoia Sugar, while Kibos Sugar & Allied Industries will pay Kes 111,190,000 (US$860.3K) for Chemilil’s 2,779.75 hectares.
Busia Sugar Industry will remit Kes 122,396,400 (US$946.9K) for Sony Sugar’s 3,059.91 hectares, and West Valley Sugar Company will pay Kes 80,080,000 (US$619.19K) for 2,002 hectares at Muhoroni.
Beyond the goodwill payments, the companies will also pay annual lease fees for the factory land, which will support cane development programs and the welfare of surrounding communities.
Farmer bonuses and sugar board concession fees
The Kenya Sugar Board (KSB) will collect Kes 1.5 billion (US$11.6M) in concession fees at a rate of Kes 4,000 (US$30.93) per ton of sugar produced, and an additional Kes 240 million (US$1.86M) at a rate of Kes 3,000 per ton of molasses.
These funds will be redistributed as annual bonuses to farmers, based on the volume of sugarcane each farmer supplies to the mills.
To safeguard the rights of factory workers, the government has signed an agreement with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW).
As part of this agreement, Kes 600 million (US$4.6M) will be paid to offset part of the workers’ salary arrears, while another Kes 400 million (US$3.09M) has been allocated for wages over a six-month period starting May 2025.
Additionally, the government has committed to a phased settlement of all pending worker arrears. A payment of Kes 1.5 billion (US$11.6M) is scheduled for July 2025, followed by quarterly disbursements of Kes 1.17 billion (US$9.04M) until all outstanding dues are cleared.
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