Africa Sugar Digest, Vol. II, No 2, 26 February 2011

Kenya: Privatisation of sugar factories may take longer than expected

The privatisation of five sugar factories may not be completed before the safeguards granted by COMESA (Common Market for East and Southern Africa) expire in February 2012, said the Kenya Sugar Board. The five factories (Nzoia, Miwani, Sony, Chemelil and Muhoroni) have a collective debt of 50 billion Kenyan shillings (USD 641.6 million) owed to the government and the sugar board. Some measures have been recommended to Parliament to deal with it, including the writing off, conversion into equity and long-terms loans. Resolving debts would pave the way for the privatisation, a condition required by Comesa to grant the safeguards which placed a ceiling on sugar imports to protect the sector. The privatisation calls for 51 percent stake in the factories to be sold to investors; 30 percent to farmers, and the remaining 19 percent will be floated in the stock exchange, once the factories are profitable.

In related news Mumias Sugar continues diversifying production. It started building an ethanol distillery at a cost of 4 billion shillings (USD 50 million) with a capacity of 22 million litres per year. It also plans to increase electricity generation from 20 MW to 27 MW in the first quarter of 2011, and to open a water bottling factory in September this year.

Local papers said Kenyan sugar production in 2010fell by 4.5 percent to 523,522 tonnes, because of lower production of cane due to adverse weather. Production is expected to grow by 6 percent in 2011, however.  There are also new factories coming online, such as Kwale International in Msambweni, and Transmara Sugar Mills and Sukari Mills in Ndhiwa. They are scheduled to start operations in 2012-13.

Uganda: Disputes over proposed new sugar factory in Jinja

The Madhvani and the Alam Groups are involved in a dispute about the setting up of a new factory to be located some 9 kilometres from Madhvani’s Kakira Sugar Works in Jinja. The new factory, which is said will create 3,000 new jobs, has already been approved, and Madhvani has asked the country’s president to intervene and stop its construction.

Main issues, according to a Madhvani’s spokesperson, revolve around the company’s expansion program that depends on adequate supply of canes, which would be jeopardized if the new factory is built. The Group also says the country’s sugar policy states that factories cannot be located within a 25km radius from another, which means at least a distance of 50 km. Madhvani said they have 8,500 registered outgrowers in the area, and only a small number of farmers are not registered with Kakira. In these conditions, the Group said, it is “absolutely unfeasible in both the short and long-run” to guarantee enough cane for both factories.

The Alam Group said the new factory will process canes not tied to Kakira and plans to register new cane farmers. It also announced the setting up of three harvesting centres where the farmers will deliver cane, and more centres would be opened when the need arises. Farmers have reacted positively because this model reduces their transportation costs. Alam is also offering financing to cultivate cane and supply the new factory, which is to start operations in September 2012.

Madhvani’s expansion program includes increasing sugar production to 185,000 tonnes per year; generating a total of 53 MW within the next 18 months (33 to 35 MW to be sold to the national grid), and producing some 40,000-50,000 litres of alcohol per day.

In related news, it was reported that residents of the Amuru district agreed to new a sugar project at Lujoro village, near River Nile, and were ready to transfer 25,000 acres of land for the project. Residents had previously been opposed to the project because they had not been consulted about it.

Nigeria: Golden Sugar to build refinery

Golden Sugar announced the construction of a USD 143.3 million sugar refinery in Lagos, with an initial processing capacity of 750,000 tonnes per year. The project will also generate 12 MW in a gas-fuelled power plant. Long-term plans include expanding refining capacity to 1.5 million tonnes per year and, over the next 7 to 10 years, to develop cane cultivation, milling and processing of raw sugar to supply the refinery.

The project has access to a five-year financial program from a bank consortium led by the Stanbic IBTC Bank Plc and Standard Bank of South Africa Ltd, which also includes the First Bank of Nigeria, Zenith Bank and the Standard Bank of Mauritius. The loan includes a USD 13.3 million Commercial Agricultural Credit Scheme to partially fund a sugar farm, and an instrument to hedge against foreign exchange risks.

Golden Sugar Company Ltd is a wholly owned subsidiary of Flour Mills of Nigeria Plc, one of Nigeria’s largest industrial conglomerates.

 Cape Verde: Transhipment of Brazilian ethanol

The Sao Vicente Island in Cape Verde will host a plant for hydrated ethanol imported from Brazil, destined for shipping to Europe, Macauhub has reported quoting A Semana. The 35-million Euros plant is a joint investment by the Cabo Verde Investimentos (CI) and Emerald – Sociedade de Investimento de Angola, and will also involve the Brazilian oil company Petrobras.

Ethiopia: Surveying lands for new sugar project

The state company Ethiopian Waterworks Design and Supervision Enterprise (EWDSE) began surveying lands for the Kuraz Sugar Development Project on 250,000 hectares in South Omo Zone, Southern Regional Estate. It was reported that some 150,000 hectares are suitable for sugar cane growing, which can support up to six sugar factories. During a recent visit to India the Ethiopian Agriculture Minister said the government is proposing to transfer some 3.6 million hectares to foreign investors, and expects that Indian firms be interested in 1.8 million ha. The Indian companies, he said, have operations in cotton, palm oil, and rubber; and one is in the process of acquiring 100,000 h for cane growing.

Africa Sugar Digest is produced thanks to the IUF Global Sugar project in East and Southern Africa. It appears as news becomes available. Contributions are welcome. The IUF African sugar project is supported by the Social Justice Fund of the Canadian Auto Workers (SJF-CAW), with contribution from the Canadian International Development Agency (CIDA) through the Labour International Development Program of the Canadian Labour Congress (LIDP-CLC).

Africa Sugar Digest, Vol. II, No 2, February 2011 – click to download –

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