Kwale International Sugar Company (KISCOL) is sliding deeper into financial distress as a Sh4 billion payment demand from farmers, active bankruptcy proceedings, and a fresh High Court application by the Kenya Bureau of Standards (KEBS) converge, placing the troubled miller on the brink of collapse.
Sugarcane out-grower farmers supplying the mill between 2020 and 2025 have formally petitioned the Ministry of Agriculture, accusing KISCOL of failing to pay for cane deliveries over five years, breaching grower contracts and multiple agricultural laws . The farmers are demanding an independent audit and immediate settlement of arrears, warning that continued delays threaten livelihoods and raw material supply.
The complaint, submitted through Mungai Kamau & Company Advocates, claims the miller has violated provisions of the Crops Act 2013, the Agriculture and Food Authority Act 2013, the Sugar Act 2024, and the Sugar (General) Regulations by failing to make timely payments, maintain transparent records, and involve farmers in oversight processes
“The Miller has failed, refused, and/or neglected to remit payments due to the out growers for cane delivered over a prolonged period spanning from the year 2020 to 2025. This conduct is in direct violation of Section 41 of the Crops Act, 2013, which requires mi llers and buyers to make timely and accurate payments in accordance with the grower agreements,” said the farmers.
They added, “The Miller has failed to provide verifiable and auditable records on pricing, tonnage, and payments. This contravenes the principles of transparency and fair commercial practices envisaged under Section 40 of the Crops Act, 2013, and the Sugar ( Regulations, 2018, which require openness in weighing, pricing, and settlement processes.”
The farmers’ claim comes as KISCOL reels from a decisive Supreme Court ruling that cleared the way for insolvency proceedings initiated by EPCO Builders Ltd over an unpaid Sh405 million debt.
Supreme Court Blow Opens Door to Liquidation
The apex court in May last year dismissed KISCOL’s bid to halt insolvency proceedings arising from a Sh2.2 billion construction contract awarded to EPCO Builders for the Kwale sugar factory. EPCO moved to court after alleging that KISCOL failed to pay Sh405 million for completed works.
Kwale Sugar had argued that the dispute should be resolved through arbitration and that the contractor’s work was defective. However, the High Court, Court of Appeal, and ultimately the Supreme Court rejected the miller’s position, ruling that the top court lacked jurisdiction to block High Court insolvency proceedings.
The ruling allowed Nairobi High Court Insolvency Petition No. 007 of 2019 to proceed, exposing the company to bankruptcy and possible liquidation if it fails to settle or successfully contest the debt.
KEBS Seeks Sh135 Million Security Over Cost Recovery Fears
To add salt to injury, the Kenya Bureau of Standards (KEBS) also recently petitioned the High Court in Kwale to compel KISCOL to deposit Sh135 million as security for costs, citing fears that the bureau may not recover awarded legal costs due to the company’s deteriorating financial position.
Court filings show the application follows KISCOL’s failure to pay Sh663,810 in taxed costs awarded to KEBS by the Court of Appeal in 2022, arising from a long-running constitutional dispute.
KEBS argued that KISCOL’s financial instability, coupled with multiple insolvency petitions—including Milimani Insolvency Petition No. 007 of 2019 and High Court Insolvency Cause No. E020 of 2021—makes recovery of costs unlikely without court protection.
KEBS claimed that the company has been transferring assets to related entities and using proxies to continue operations, raising concerns about its ability to meet financial obligations.
“The deposit of Sh135 million is a procedural requirement following the court ruling, aimed at finalizing the costs aspect of the case.”
The bureau also accused the company of transferring assets to related entities and using proxies to continue operations, raising red flags over its ability to meet financial obligations.
Toxic Sugar Dispute Adds to Regulatory Pressure
The KEBS case traces back to 2018, when regulators seized about 5,000 tonnes of KISCOL’s brown sugar, citing mercury contamination and declaring it unfit for human consumption. KISCOL disputed the findings and obtained temporary court orders to block the destruction of the sugar.
In 2025, a Mombasa court acquitted 11 individuals, including KEBS and KRA officials, accused of mishandling the case. KEBS is now seeking to secure potential costs ahead of hearings scheduled for October 22–24, 2025, further tightening the legal noose around the miller.
