Kenya’s Cabinet Secretary for Agriculture Mutahi Kagwe has assured parliament that all initial and additional investments made by private millers in the four leased state-owned sugar factories will revert to the government once the 30-year lease period ends.

The mills – Sony, Nzoia, Chemelil and Muhoroni – were handed over to private operators on May 10, 2025, under long-term concession agreements to improve efficiency, modernising operations and boost cane production.

Importantly, Kagwe, in his address to parliament disclosed that the leases were given to Busia Sugar Industry Ltd (Sony), West Kenya Sugar Company Ltd (Nzoia), Kibos Sugar and Allied Industries Ltd (Chemelil) and West Valley Sugar Company Ltd (Muhoroni).

Under the lease terms, the cabinet secretary disclosed, investors will pay an annual rent of Ksh40,000 per hectare for Chemelil, Muhoroni and Sony and Ksh45,000 per hectare for Nzoia, plus concession fees of Ksh4,000 per tonne of sugar and Ksh3,000 per tonne of molasses, as well as a one-off goodwill payment in the first year.

According to Kagwe, the agreements require millers to invest heavily in cane development, modernise and rehabilitate factory equipment, adopt new technologies and diversify into electricity co-generation, bioethanol and related products.

“They must also maintain nucleus estates and out-grower systems to secure cane supply. The government leased the entire factory ecosystem as a composite asset, meaning nucleus land and standing cane were not valued separately,” he stated.

Further, Kagwe assured MPs, fears of monopoly are unfounded citing the Sugar Act of 2024, which established the Kenya Sugar Board with powers to regulate milling operations, while the Competition Act bars any firm from controlling over 50 per cent of the national market.    

In this regard, the cabinet secretary confirmed that no miller exceeds this threshold adding lease proceeds will directly benefit local farmers through bonuses, cane development and infrastructure support, as the government shifts from direct mill management to a regulatory role.

On the long-standing Miwani Sugar land dispute, the cabinet secretary disclosed that two conflicting court rulings have complicated ownership of LR No. 7545/3. With the matter pending before the Court of Appeal, the Cabinet has directed the ministry and the attorney general to pursue an amicable settlement with Crossley Holdings to safeguard public interest and unlock the land for development.

Meanwhile, Kagwe reaffirmed that the leasing model is designed to revive production, cut losses, attract investment and protect farmers – with all assets and improvements returning to full government ownership at the end of the 30-year term.

• A Tell Media / KNA report / By Michael Omondi