Nzoia Sugar Company in Bungoma County. The miller made the highest loss at Sh2 billion in the 2014/15 financial year. [File, Standard]
Financial woes facing local sugar millers have deepened further with three factories reporting more than Sh3.3 billion in losses, according to the latest Auditor General’s report.
The report shows Nzoia Sugar Company reported a Sh2 billion loss in the 2014/15 financial year while Sony and Chemelil sugar companies made Sh748 million and Sh640 million loss respectively.
This is up from the Sh2.8 billion loss the three millers had posted in the 2013/14 financial year. The Auditor General Edward Ouko noted that the worsening financial situation in Nzoia Sugar Company meant the miller will continue to depend on the support of the Government and creditors.
During the 2013/14 financial year, Nzoia reported a Sh2 billion loss and had an accumulated loss of Sh35 billion following years of decline. However, the miller’s revenue increased from Sh3 billion to Sh5 billion during the period under review.
But high financing costs which rose to Sh1 billion and administrative expenses that hit Sh2 billion, forced the company into the Sh2 billion loss territory.
The miller during the year under review defaulted on a Sh34 billion loan from the National Treasury and another Sh2 billion loan from the Agriculture Food and Fisheries Authority (AFFA).
The loans were advanced in the 1980s and have been outstanding for several years, after the sugar miller defaulted on the repayment of principal.
Sony Sugar, on the other hand, blamed high taxes and levies on sugar for its worsening financial position, which the management said in the financial report had impeded growth and expansion of the industry.
In a report to the Auditor General signed by Board Chair Ambrose Weda, the miller reported a Sh1.2 billion pre-tax loss after its gross sales dropped from Sh5.3 billion in the 2013/14 financial year to Sh4.5 billion.