Sony Sugar Asks for Patience to Clear Farmers’ Sh800m Debt

Sony Sugar Company still owes farmers Sh800 million for cane delivered to the factory and milled. Acting Managing Director Stephen Ligawa said the arrears date back to 2019.

The miller has been operating below its installed optimal capacity due to its ageing milling machine that often breaks down. While the factory’s installed capacity is 2,700 tonnes of cane per day it has been milling less or an average of 2,000 in the last seven years.

This has grossly affected its daily production output and revenue proceeds and pushed it into huge debts.

Sony Sugar management is also struggling to offset workers salary arrears accrued from 2019 totalling to Sh1.2 billion.

 “The arrears were actually Sh1.4 billion but we have managed to reduce it by payments in bits to Sh1.2 billion,’’ Ligawa explained.

But most of the money has not gone directly into the workers pockets. Huge chunk of it has gone to offset statutory deductions, including National Social Security Fund (NSSF) while others cleared Saccos and welfare groups’ arrears.

Ligawa implored farmers to be patient as they make efforts to improve on their production throughput to generate more revenue and offset the accrued arrears on a reducing balance. “We had to do this to comply with the law. I recall last financial year I was almost committed to civil jail by NSSF,’’ he said.

He had to pay NSSF Sh30 million to avoid going to jail. Sony Sugar’s monthly wage bill is Sh50 million and it’s accruing each month.

The company also owes suppliers Sh400 million, which it is  struggling to reduce almost each month.Ligawa explained that they sunk into deep arrears when their daily production output declined as they struggled to sort this out.

Sony ran into headwinds when it lost the steady supplies of raw material to alleged cane poaching by rivals in the industry.

Due to delayed harvesting and payment of farmer’s dues in good time, some farmers opted to deliver cane to rival millers. Sony is surrounded by Sukari industry in Dhiwa, Homa Bay County and Transamara in Narok County.

The two factories have been giving Sony hyper competition amid its current financial woes offering alternative solutions to farmers.

Now, the firm says it is working round the clock to normalise its operations and find lasting solutions to the foresighted challenges.

In the last financial year, the firm was lucky to receive Sh179 million from the State to repair its old machinery. The money was, however, not paid directly to the firm. It was domiciled at the Agriculture and Food Authority (AFA).

It is AFA that was spending the money based on documentation of need raised by Sony Management, Ligawa said. So far, AFA has procured for the miller broken down parts of machine amounting to Sh123 million only. The rest of the money is under the custodian of the Director General of AFA.

‘’The balance is to be released based on quotation of the supplies material that Sony will raise in its purchase order, ‘’Ligawa said. 

The Awendo-based sugar miller was also lucky to have received Sh138 million to offset farmers arrears. This money they never touched as well. It went directly to the farmer’s accounts  on payment by the Treasury.