The auditor-general has revealed that a Ksh 180 million shipment of consumables purchased by Nzoia Sugar Company in the 2014/15 financial year has been “in transit” for eight years. The lack of explanation for the delay and the current status of the shipment compounds the company’s mounting troubles.
According to the report, Nzoia Sugar Company is technically insolvent, with debts surpassing Ksh 53 billion. The company’s assets are valued at a mere Ksh 1.6 billion, leading to severe financial instability. The Auditor-General noted that the company’s ability to continue operating depends heavily on financial support from creditors and the government.
The company’s financial position is further strained by significant unpaid employee salaries, pension contributions, and unresolved loans accruing substantial interest. These factors have distorted the financial position, raising significant doubts about Nzoia Sugar Company’s ability to operate as a going concern.
The company’s operational challenges are marked by low production volumes, cash flow constraints, and prolonged maintenance periods. Despite budgeting for revenue of Ksh 5.1 billion against the cost of sales of Ksh 3.3 billion and operating expenditure of Ksh 1.3 billion, the actual performance fell drastically short, resulting in a loss after tax of Ksh 3.5 billion.
The mysterious case of the Ksh 180 million shipment of consumables adds another layer of complexity. Purchased in the 2014/15 financial year, the shipment has been marked as “in transit” for eight years with no clear explanation or current whereabouts, reflecting severe inefficiencies and possible mismanagement within the company.
The Auditor-General’s report emphasizes the urgent need for strategic interventions to address the financial and operational challenges facing Nzoia Sugar Company. Without substantial restructuring and financial support, the company’s future remains bleak, potentially impacting thousands of sugarcane farmers and employees dependent on its operations.
