How Sony Sugar's 4,000-acre auction puts to test Ruto's Sh117b write-off pledge

The Cooperative Bank is now preparing to sell thousands of acres owned by the South Nyanza Sugar Company (Sony Sugar) after a 40-day notice to the sugar miller to pay an outstanding debt lapsed last week.

The move by the bank to auction the 4,000-acre land over a Sh862.3 million debt has put President William Ruto's Western Kenya sugar millers’ revival strategy under scrutiny amid fears by farmers that they stand to lose their livelihoods, which were at the core of the government’s intervention. 

Though the National Treasury has intervened to stop the auction, agreeing to settle the facility, questions are being raised over why the liability was not among those extinguished by the Sh117 billion government write-off, which was hailed as the sector's salvation. 

Financial Standard understands the Treasury has given an undertaking to clear the debt following direct engagement with local farmers and leaders, who sought to prevent the forced sale of the 4,000-acre nuclear estate in Migori County ahead of an August 20 deadline.  

But the intervention raises uncomfortable questions, farmers told Financial Standard, including why Sony Sugar still owes Co-operative Bank Sh862.3 million if the Sh117 billion in loans and tax arrears were written off in October 2023 to clean up the balance sheets of State-owned sugar millers.

Other issues that the farmers want addressed include whether the government will now be forced to bail out a miller it leased to a private operator in May 2025, and whether Sony Sugar’s assets and liabilities were independently valued before the revival plan was put in motion, as well as whether the valuation was handed over to the office of the Auditor General Nancy Gathungu, for review.

Also unanswered now is whether the value of assets could also have been underestimated as the government rushed to lease the miller alongside Nzoia, Chemelil and Muhoroni.

Co-operative Bank notified Sony Sugar on July 14 this year that it intended to exercise its statutory power of sale over Land Reference No. 16339/1 unless the miller rectified default on a facility secured by a legal charge and a first-ranking all-asset debenture.

The notice followed a 90-day statutory demand issued on August 13, 2025, which the company failed to address. "Our Ref: SONY/102046287/2026," the bank's letter read.

"As you are fully aware and despite the notice mentioned above, you have not rectified the default, and you owe the bank the sum of Sh862,328,980.41 DR as of 14 July 2026 in respect of a facility granted to South Nyanza Sugar Company Ltd". 

The 40-day notice expired last week on Saturday.

President Ruto, in May 2025, stood in Awendo and declared Sony Sugar would be revived under a 30-year lease to Busia Sugar Industry Ltd. The President's administration had positioned the combined Sh117 billion debt write-off  owed by the State-owned sugar millers as a watershed moment, clearing government-held debt, tax penalties and farmer arrears that had crippled public mills for decades. 

Yet, farmers reckon that Co-op Bank's notice suggests that commercial creditors were left out of the cleanup, leaving Sony Sugar exposed to legal action even as President Ruto declared the sector reborn.  

“When Sony Sugar was being leased to Busia Sugar Company in 2025, the government was aware of any existing loans that were supposed to be settled before the leasing process,” said Argwings Adonga, Secretary General, Sony sugarcane farmers.

He noted that farmers were living in uncertainty and feared losing the 4,000 acres of land. He stated that the farmers wanted the government to settle the debt to ensure the company continues operating without hiccups.

John Omollo, chairman of the sugarcane farmers from Sony Sugar said the nucleus land was donated by the residents of Awendo in the 1970s to pave the way for the establishment of the mill.

“Sony is our property, and it sits on our land. It is important to safeguard its existence by ensuring that it is not auctioned,” he said.

The revival of the State-owned millers is central to Ruto's agricultural agenda, which seeks to make Kenya a major sugar exporter by 2028.

But the industry has been a graveyard for political promises for decades, with its collapse leaving thousands of farmers unpaid while millers accumulated billions in debt. 

A section of farmers in the South Nyanza region argue that the government was aware of existing loans when the company was being leased to Busia Sugar Industry in 2025. 

They fear the loss of more than 4,000 hectares of land donated by their forefathers in the 1970s to pave the way for the mill, which they consider critical to sugarcane production and their livelihoods.

The farmers are opposed to the sale of any property belonging to Sony Sugar, especially the nuclear plantation that was donated by previous generations.  "If the nuclear estate is auctioned, what is left to lease?" one farmer said. 

The planned auction has sparked widespread concern among farmers who depend on the factory for their livelihoods. 

Earlier records showed the different sugar mills owed banks Sh65 billion, the government Sh50 billion in taxes, and farmers nearly Sh2 billion before the 2023 write-off. The Sh117 billion figure included only loans and tax arrears owed to the State, not commercial bank facilities like the one Co-op Bank is now pursuing. 

Financial Standard understands that more creditors are said to be likely to enforce their liabilities through auctions, raising fears that Sony Sugar could face a wave of similar actions from other lenders holding claims against the miller.