Muhoroni Sugar Factory was closed down last week due to tax arrears amounting to Sh861m as demanded by the Kenya Revenue Authority, the company in charge of tax collection in the country.
In this, the factory owes KRA Sh212, 685,482 for income tax, Sh387, 305,281 for the main collection account and Sh266, 714,169 for the sugar development levy.
The move to close down the factory has affected more than 23,000 contracted farmers from Nandi and Kisumu regions who supply cane to the miller. The factory also owes workers three months’ salary in amount overdue.
Besides, Muhoroni, other sugar factories in the region include Sony Sugar, Kibos Sugar, and Chemelil Sugar factories.
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The company controls 6.56 per cent market share in an industry that is led with Mumias Sugar factory in Western Kenya that controls 19.93 per cent of the total sugar output in Kenya.
It is not the first time for the factory to be closed down as it was also shut down two and half years ago in April 2016 due to machine break down.
A worker working in a sugar factory in the past. Photo: courtesy
Muhoroni has been cash-strapped since 2014, when it almost closed its doors after lacking funds to settle a Sh500m debt. At the time, the company had 30,000 tonnes of unsold sugar and was still producing 150 tonnes daily.
According to the 2018 economic survey report released by the Kenya National Bureau of Statistics, the total domestic sugar production declined by 41.2 per cent from 639.7 thousand tonnes in 2016 to 376.1 thousand tonnes in 2017.
A total of 989.6 thousand tonnes of sugar was imported in 2017 to bridge the deficit occasioned by the low production during the year. Most of the sugar imports were meant for final consumption at 83.1 per cent of total sugar imports.
During the year under review, the area under cane reduced to 191.2 thousand hectares compared to 220.8 thousand hectares in 2016. Reduction in cane area was attributable to conversion of some area under cane to other crops such as maize and soya beans.
Further, the quantity of cane delivered to factories reduced by 33.3 per cent from 7.2m tonnes in 2016 to 4.8m tonnes in 2017. This was on account of prolonged dry weather conditions which were unfavorable for the growth of cane leading to harvesting of immature cane. As a result, the average sugarcane yield reduced to 55.3 tonnes per hectare in 2017 compared to 62.2 tonnes per hectare in 2016, representing a decrease of 10.9 per cent.