Talks between the Government and Uganda-based sugar moguls, Madhvani Group, are at an advanced stage regarding the latter’s plans to expand Kabuye Sugar Works to a production capacity of up to 55,000 metric tonnes a year.
Currently, the plant produces between 10,000 and 15,000 metric tonnes annually.
Madhvani Group, which owns the plant, have already submitted a proposal on the proposed expansion and modalities of cooperation with the government.
Speaking exclusively to The New Times, yesterday, Mayur Madhvani, the Madhivani Group managing director, said under the new proposal, they hope to scale up the production to 55,000 tonnes.
Mayur was in the country, yesterday, where he led a delegation that met officials from Rwanda Development Board (RDB) with whom they discussed the planned investment.
As part of a new investment worth $75 million (about Rwf60 billion), the company will also venture in energy generation where they plan to produce 12 megawatts and six million litres of ethanol annually.
According to Mayur, part of the energy generated will be used in the activities of the plant, while the surplus will be dispatched to the national grid.
During the interview, he admitted that recent years have seen their production fail to meet their projections largely due to issues of land shortage and over flooding of River Nyabarongo that led to loss of sugar cane.
“Among the issues we are addressing is availability of land. We also have suffered a lot because of the weather in the last four or five years which caused the flooding of the River Nyabarongo and led to the loss of sugar cane,” Mayur said.
The proposal also entails the establishment of a new factory to handle the new target capacity as well as additional land for sugar cane production.
“The new factory will cater for a larger area, we will have a nucleus estate,” he said.
Madhvani Group has also asked the Government to acquire some shares as the firm plans to list on the stock exchange in coming days.
Kamlesh Madhvani, one of the Joint Managing Directors of the Madhvani Group, told The New Times that they were ready to proceed with the planned expansion as soon as they get the green light from government.
Already, he said, they were injecting about Euro 8 million some of it going towards mitigating risks related to the over flooding of Nyabarongo.
The expansion of the sugar plant is expected to greatly contribute in cutting the trade deficit which continued to widen in the first half of this year.
Proposal under review
While confirming that the proposal was under review to establish the feasibility of the expansion, Rwanda Development Board chief executive Francis Gatare told The New Times that, currently, annual sugar imports cost about $35 million (about Rwf28 billion) and welcomed efforts to trim the figure.
The country’s demand for sugar is estimated at 80,000 metric tonnes annually.
Madhvani Group bought the sugar factory from the Government at $1.5 million in 1997, making the Group the first foreign investor after the 1994 Genocide against the Tutsi.
In recent years, the Government has been pressing the firm to expand their scale of production and capacity to meet the consumption demand.
“There have been expectations by the government that the firm would reduce reliance on imports and even promote exports of sugar. But there were shortfalls largely due to the over flooding of Nyabarongo River,” Gatare said.
The ultimate way forward is likely to have financial implication on both the government and investor.
Gatare said the final agreement between the two parties is likely to be a public private partnership model for efficiency.
Madhvani Group has also expressed interest in taking over Umubano Hotel, which is currently being handled by a liquidator.
This follows a failed management deal between government and a Libyan firm, Libya Africa Investment Portfolio, which had acquired a 60 per cent stake in the hotel.
Commenting on the issue, the Group’s executives said they were keen on investing more in the country and had submitted their request with concerned parties for consideration.