The National Treasury has moved to stop the planned auction of land owned by South Nyanza Sugar Company Limited (Sony Sugar) over an outstanding Sh862.3 million debt owed to Co-operative Bank of Kenya.
The intervention follows a 40-day auction notice issued by the bank after the state-owned miller failed to settle the debt, raising concerns over the potential loss of public assets and its impact on farmers and workers in the region.
Awendo MP Walter Owino said on Tuesday that the government had taken steps to resolve the dispute after engaging National Treasury and Economic Planning Cabinet Secretary John Mbadi.
Owino said the debt had already been recognised as a public pending bill during the government’s restructuring of state-owned sugar companies in preparation for their leasing.
“Following direct engagement with the Cabinet Secretary for the National Treasury and Economic Planning, Hon. John Mbadi, the Ministry has undertaken to expedite an agreement to settle the Co-operative Bank facility in full,” Owino said.
He said the move would prevent the forced sale of the miller’s property and safeguard assets considered critical to the company’s operations and the livelihoods of people who depend on the factory.
The intervention will also cover long-standing arrears owed to sugarcane farmers and factory employees, according to the MP.
“Beyond resolving the institutional debt, the National Treasury’s intervention incorporates the clearance of long-outstanding arrears owed to sugarcane farmers and factory staff, ensuring equitable relief across the local sugar value chain,” he said.
Owino added that the timelines for disbursement of payments to farmers and workers would be communicated by the company’s management through official channels.
The government’s intervention comes after Co-operative Bank formally notified Sony Sugar of its intention to exercise its statutory power of sale over a parcel of land registered in the company’s name.
In the notice addressed to the company’s chief executive officer, the bank said Sony Sugar had failed to remedy the default despite an earlier statutory demand.
The bank placed the outstanding amount at Sh862,328,980.41 as of July 14, 2026, arising from a credit facility advanced to the sugar company.
According to the notice, the facility was secured, among other securities, by a legal charge over Land Reference Number 16339/1 and a first-ranking All Asset Debenture in favour of the bank.
The lender said it had issued a 90-day statutory demand notice on August 13, 2025, but the company had not rectified the default.
Co-operative Bank subsequently gave Sony Sugar 40 days from the date of service of the latest notice to clear the outstanding amount, warning that failure to do so would trigger the exercise of its statutory power of sale over L.R. No. 16339/1.
“Take notice that the Bank intends to exercise its statutory power of sale over Property L.R NO. 16339/1 registered in the name of South Nyanza Sugar Company Limited after expiry of forty (40) days from the date of service of this Notice upon yourself unless you rectify the default and all the outstanding balances owed to the Bank are fully settled within the aforesaid period,” the letter reads in part.
The planned auction threatens to complicate further the financial challenges facing the miller, whose operations support thousands of farmers and workers in the South Nyanza sugar-growing region.
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