Ethical Sugar - Kenya to build new $300m sugar factory

News today - Monday 30 October 2006

Kenya will open a new sugar factory in 2006 at a cost of $300-million with the backing of a Swiss bank to mill a fast-growing cane variety, investors and officials said yesterday.

Kenya's state-run Tana and Athi River Development Authority (TARDA) and MAT International signed a partnership agreement to build the Tana Delta Sugar Company in Garsen, 320 km southeast of Nairobi, using finance through a consortium led by Switzerland's UBS bank.

Kenya's sugar factories are located in the west of the country.

"Under this agreement between MAT International and TARDA we are providing total financial requirement as per the estimated cost of processing the plant," Abdiwahab Haji Yerrow, chairman of MAT, told reporters.

MAT will hold a 70% stake and TARDA the remaining 30%.

Kenya produced 516 800 t of sugar in 2004 compared with 448 500 t in 2003. It imported 164 000 t last year, compared with 182 200 t the previous year.

Tana Delta Sugar Company expects to initially produce 160 000 t of sugar annually.

Alex Mureithi, chairman of TARDA, said tests carried out showed cane in the Tana Delta grew faster and had higher sucrose content than other world sugar growing regions.

The factory would start next year after an environmental assessment.

"In Tana Delta the sugar cane grows day and night. It's the only place so far in the world that has been found with 303 sugar cane days," Mureithi said.

"With that kind of record we shall produce the most inexpensive sugar in this part of the world."

Environmentalists had warned that the project could interfere with the flood plains and the riverine forest habitats critical for the unique biodiversity in the area that is home to two rare and endangered primate species, the Crested Mangabey and Red Colobus.

But supporters of the project said they would carry out a detailed environmental impact assessement study.

Nolan Farhy, vice-president of UBS in charge of investments in Africa, said the bank were satisfied with the project's viability.

"Last July we had the pleasure to tour the project and we were highly impressed by its potential, we look forward to helping them in facilitating and sourcing the necessary financial resources for the success of this project," Farhy said.