At the expiry of the 30-year lease term, all initial and additional investments made by private millers in the four state-owned sugar factories will automatically revert to the Government, Agriculture and Livestock Development Cabinet Secretary Sen. Mutahi Kagwe has assured Parliament, as the State is reviving the ailing sugar sector through private capital.
The Cabinet Secretary said the mills — South Nyanza (Sony), Nzoia, Chemelil and Muhoroni — were officially handed over to private operators on 10th May 2025 under long-term concession agreements designed to restore efficiency, protect farmers and unlock new investments in cane development and processing. South Nyanza Sugar Company was leased to Busia Sugar Industry Ltd, Nzoia Sugar Company to West Kenya Sugar Company Ltd, Chemelil Sugar Company to Kibos Sugar & Allied Industries Ltd, while Muhoroni Sugar Company went to West Valley Sugar Company Ltd.
Under the lease framework, the investors will pay an annual lease rental of KShs. 40,000 per hectare for Chemelil, Muhoroni and Sony, and KShs. 45,000 per hectare for Nzoia, in addition to a concession fee of KShs. 4,000 per tonne of sugar produced and KShs. 3,000 per tonne of molasses. A one-off goodwill payment equivalent to one year’s lease rent is also payable in the first year. The leasing package covers land, buildings, plant and machinery and the entire factory ecosystem, with only motor vehicles and livestock excluded from the asset portfolio.
Sen. Kagwe emphasised that the agreements go beyond ordinary leasing and impose strict performance obligations on the private millers. The lessees are required to invest in massive cane development programmes, rehabilitate and modernise factory equipment, and adopt new technologies to improve milling efficiency and recovery rates. They must also diversify into cogeneration of power, production of bioethanol and allied products, while ensuring the management and maintenance of nucleus estates and out-grower systems to secure sustainable cane supply for the factories.
Addressing questions on whether the lease rent considered the value of the nucleus estate land and standing cane, the CS clarified that the Government deliberately leased the entire ecosystem as a composite asset, meaning that the nucleus land and standing sugarcane were not valued separately, but were factored into the overall lease and concession structure.
To address fears of market capture and monopolistic behaviour, Sen. Kagwe told Parliament that the leased factories are regulated under the Sugar Act, 2024, which established the Kenya Sugar Board (KSB) with wide powers to oversee cane development, harvesting, milling operations and farmer protection. He added that all millers are also subject to the Competition Act, which restricts any firm from controlling more than 50 per cent of the national market. “Following the leasing of the four state-owned sugar mills, none of the sugar companies controls more than 50 per cent of the market,” he said, noting that both KSB and the Competition Authority will retain strict oversight of the sector.
The Cabinet Secretary further explained that the lease proceeds will directly benefit local farming communities, particularly through payment of farmers’ bonuses, investment in cane development, infrastructure and support to out-grower systems, as the Government shifts away from direct mill management to a regulator and enabler role.
On the long-standing Miwani Sugar Company land dispute, Sen. Kagwe said the matter remains legally complex after the emergence of two conflicting court judgments over ownership of the land known as LR No. 7545/3 IR No. 21038. He recounted how the initial High Court case in Kisumu in 1993, in which Nagendra Saxena sought to attach and sell the land, was later declared a nullity after Miwani Sugar Company (1989) Limited successfully challenged the process. The subsequent appeal by Crossley Holdings Limited at the Court of Appeal was dismissed in 2008, affirming that the purported sale was invalid.
However, during later efforts by the Government to lease the land, Crossley Holdings returned to court through a petition filed in 2020 at the Environment and Land Court in Kisumu, which delivered a judgment declaring Crossley the owner of the property — creating a direct contradiction with the earlier Court of Appeal ruling. Miwani Sugar Company (1989) Limited and the Attorney General have since filed Civil Appeal No. E207 of 2021, which is still pending before the Court of Appeal.
In view of the conflicting decisions and the sensitivity of the public asset involved, Sen. Kagwe revealed that the Cabinet has directed the Ministry and the Attorney General to pursue an amicable settlement with Crossley Holdings Limited and record a consent, in order to safeguard public interest and unlock the land for sugar sector development.
The CS reaffirmed that the leasing of the four state-owned mills marks a policy shift in the management of public sugar assets, aimed at attracting private capital, restoring production, cutting losses, protecting farmers, creating jobs and returning the industry to profitability, while ensuring that the factories and all new investments eventually revert to full Government ownership at the end of the 30-year term.
