Treasury Intervenes to Halt Sony Sugar Land Auction Over Sh862 Million Co-op Bank Debt

The National Treasury has moved swiftly to prevent the impending auction of prime land belonging to the state-owned South Nyanza Sugar Company Limited (Sony Sugar). This decisive intervention comes as Co-operative Bank of Kenya sought to recover an outstanding debt of Sh862.3 million, a move that threatened the mill's assets and the economic stability of thousands in the region.

The bank had issued a 40-day notice for the auction of the company's property, following the miller's repeated failure to clear its financial obligations. The urgency of the situation prompted Awendo MP Walter Owino to engage directly with National Treasury and Economic Planning Cabinet Secretary John Mbadi, leading to the government's commitment to resolve the impasse.

Speaking on Tuesday, Owino confirmed that the government had recognized the debt as a public pending bill, a classification made during the ongoing restructuring of state-owned sugar companies ahead of their planned leasing. He quoted, “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.” This commitment is critical for Kenya's efforts to reform its ailing sugar sector.

Owino further elaborated that the Treasury's commitment extends beyond just the institutional debt. It also encompasses the long-standing arrears owed to sugarcane farmers and the factory's employees. He stated, “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.” The company management will subsequently communicate specific timelines for these disbursements.

Co-operative Bank had formally informed Sony Sugar of its intention to exercise its statutory power of sale over Land Reference Number 16339/1, a key asset for the company. The bank cited Sony Sugar's failure to remedy the default, despite an earlier statutory demand. The precise outstanding amount stood at Sh862,328,980.41 as of July 14, 2026, stemming from a credit facility secured by a legal charge on the said land and a first-ranking All Asset Debenture.

The lender had initially issued a 90-day statutory demand notice on August 13, 2025, which went unaddressed. Subsequently, Co-operative Bank gave Sony Sugar a final 40-day window from the date of the latest notice's service to clear the debt, explicitly warning of the activation of its statutory power of sale over L.R. No. 16339/1 if payment was not made. The notice read in part: “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.”

This government intervention offers a crucial lifeline to the financially distressed miller, whose operations are vital for thousands of farmers and workers in the prominent South Nyanza sugar-growing region. The resolution aims to avert further complications for the company and safeguard the regional economy. This report draws on information from Bizna Kenya.