By Sandra Blessing
All employees at South Nyanza Sugar Company Limited (Sony Sugar) will have their services terminated by 31st October 2025 due to redundancy declared by the government.
In a circular from the Managing Director Martin Dima addressed to all employees, he said” the decision was arrived at following the leasing of the state-owned sugar mills to investors and the subsequent handover of the factories to the respective investors on “10th May 2025.”
“Furtherance to the communication from Principal Secretary, Ministry of Agriculture and Livestock Development on the notice of termination and to comply with the Employment Act 2007. Individual employees will be served with termination letters that will include but not limited to; Employee’s entitlements under redundancy provisions as enumerated under Section 40 of the Employment Act and applicable CBA and all dues and entitlements in lieu with the provision of the law and CBA. All employees are therefore, advised to treat this communication as a formal notice of termination of employment due to redundancy occasioned by factors mentioned above” he wrote.
Employees at the four leased sugar factories now face termination of employment after the government moved to declare redundancies.
Last week, in a memo from Permanent Secretary, Ministry of Agriculture and Livestock Development, Dr Kipronoh Rono, dated 12th August 2025, directed the Managing Directors to issue termination notices, and it was captioned “Re-Issuance of Termination Notices to Employees Under Redundancy”.
**“In light of the ongoing restructuring of public sugar companies under the leasing framework, and in accordance with the provisions of Section 40 of the Employment Act 2007 and the respective Collective Bargaining Agreements, you are hereby directed to issue formal redundancy notices to all affected employees in your organisation.
The notices should: Be in writing, stating clearly the reasons for the termination, outline the employees’ entitlements under the redundancy provisions of the Employment Act, 2007 and the applicable CBA.
Be copied to the County Labour Officer in compliance with statutory requirements and employees should also be informed that all the dues and lawful entitlements will be fully paid in line with the provisions of the law and the CBAs.”** he wrote.
The memo was written to Managing Directors: Nzoia Sugar Company, South Nyanza Sugar Company, and Chemelil Sugar Company, and Joint Receiver Manager, Muhoroni Sugar Company.
Recently, the Cabinet Secretary for Agriculture and Livestock Development, Mutahi Kagwe, said that following broad-based consultation, four private millers have been awarded a 30-year lease for the operation of Nzoia, Chemelil, Sony and Muhoroni Sugar Companies.
“The procurement of the four firms followed broad-based engagement with stakeholders across the sugar sector dating back to the year 2015 when Parliament approved the process,” he said.
In a press statement, the CS said leasing of Nzoia Sugar Company was awarded to West Kenya Sugar Company, while that of Chemelil Sugar Company was awarded to Kibos Sugar & Allied Industries Limited.
He said leasing of Sony Sugar Company was awarded to Busia Sugar Industry Ltd, and that leasing of Muhoroni Sugar Company was awarded to West Valley Sugar Company.
“The four firms were competitively procured by the government through the Ministry of Agriculture and Livestock Development, the Kenya Sugar Board, and other government key players,” he said.
He observed that the decision to lease out the four factories was arrived at after lengthy consultations with key stakeholders across the sugar sector including farmers, sugar factory workers, unions, Members of Parliament, Governors, and approvals by the Cabinet.
“Last year, the government wrote off over Sh117 billion to bail out the local sugar industry and injected an additional Sh2.5 billion to clear arrears owed to farmers and workers,” he said.
The Ministry further wishes to reassure all stakeholders that no public land will be sold or acquired under the leasing agreements, Kagwe pointed out.
“All assets belonging to the four sugar companies including land will remain the property of the national government. The assets will be leased out to the lessees annually based on the prevailing market rate with proceeds being collected by the Kenya Sugar Board for reinvestment into communities around the four factories and for utilisation in cane development,” he said.
The investors were expected to invest Sh12.29 billion towards the revival of the sugar factories.
Under the lease agreement, the following investments will be made:
- West Kenya Sugar Company, which won the lease for Nzoia Sugar Company, will invest Ksh. 5,764,331,333 into the factory.
- Kibos Sugar & Allied Industries Ltd, which won the lease for Chemelil Sugar Company, will invest Ksh. 4,500,000,000 into the factory.
- West Valley Sugar Company Ltd, which won the lease for Muhoroni Sugar Company, will invest Ksh. 1,023,000,000 into the factory.
- Busia Sugar Industry Ltd, which won the lease for Sony Sugar Company, will invest Ksh. 1,000,000,000 into the factory.
The funds will be invested directly into the four mills to ensure that they are operational and can meet their inbuilt threshing and sugar production capacity.
The rehabilitation of the four sugar companies will enable the lessees to operate at optimal capacity, thereby safeguarding employment opportunities and enabling farmers to deliver more cane and increase their earnings.
In addition to the Ksh. 12.29 billion, the four lessees will pay a total of Ksh. 521,971,400 in goodwill for the leasing of land belonging to the four mills.
The payment is calculated based on the annual cost of leasing land per hectare. The costs are broken down as follows:
- West Kenya Sugar Company will pay a goodwill of Ksh. 208,305,000 for the 4,629 Ha owned by Nzoia Sugar Company, calculated at a rate of Ksh. 45,000 per Ha.
- Kibos Sugar & Allied Industries Ltd will pay a goodwill of Ksh. 111,190,000 for the 2,779.75 Ha owned by Chemelil Sugar Company, calculated at a rate of Ksh. 40,000 per Ha.
- Busia Sugar Industry Ltd will pay a goodwill of Ksh. 122,396,400 for the 3,059.91 Ha owned by Sony Sugar Company, calculated at a rate of Ksh. 40,000 per Ha.
- West Valley Sugar Company Ltd will pay a goodwill of Ksh. 80,080,000 for the 2,002 Ha owned by Muhoroni Sugar Company, calculated at a rate of Ksh. 40,000 per Ha.
Beyond the over Ksh. 522 million to be paid in goodwill, the four lessees will pay an annual lease for the land owned by the four factories at the beginning of each year.
The funds will be invested in cane development and will cater for the welfare of communities living around the factories.
