Auditors pocket Sh109m to guide sugar firms’ sale

Economy

Auditors pocket Sh109m to guide sugar firms’ sale

Tuesday, July 30, 2019 20:14

By BRIAN NGUGI

An accounting firm picked to advise on the sale of five State-owned sugar millers will earn Sh109 million in professional fees from the process even as the State fails to meet transaction deadline.

The Privatisation Commission picked Baker Tilly Merali’s to evaluate the loss-making entities and dispose of them by end July 31, a deadline that the State has failed to meet.

The commission revealed the fees for consultancy services in internal documents, seen by the Business Daily.

"This is value for money," chief executive Joseph Koskey said on Tuesday, adding that the lead consultant picked after a thorough search process has tapped other firms for the various aspects of the advisory.

"The Sh109 million was shared among five companies translating to Sh21.5 million per sugar company."

He said the advisory has four components including legal, technical, financial and valuation."They are on the ground...they will advise on the transaction till the end of the process," said Mr Koskey as he defended the process to pick the firm.

He maintained there is no delay to the process, which he said would be "in the best interests of the sugar farmers".

He had earlier on Monday said the delay in the release of the sugar task force report had tied the hands of the commission. He also cited political interference.

The findings of the task force President Uhuru Kenyatta appointed, he said, could inform the future of the millers.

“The challenge that we face is that the entire process is not entirely within our control,” Mr Koskey told the Business Daily.

“When politicians make pronouncements saying ‘we cannot allow our sugar companies to be sold’ and they go inciting people, when you want to send transaction advisers to the ground to work it becomes a problem.”

Mr Koskey said in March the selected transaction adviser would assess the assets and liabilities of Sony, Chemelil, Nzoia, Muhoroni and Miwani companies and give the position of their financial status to guide the sale to strategic investors.

Mr Koskey had stated then the process to sell 51 percent stake to private investors was “well on course,” expressing optimism that it would be concluded in “four months”.

“We are also awaiting the task force report…Others have said that we needed to wait for the President to release the report before we progress with anything," he said earlier on Tuesday.

The agency was earlier banking on political goodwill arising out of a recent deal brokered between former Prime Minister Raila Odinga and the governors from sugar cane growing zones, who had initially opposed the process of selling the factories to private investors.