Sugar imports could reduce in coming days as Kabuye Sugar Works is set to complete the first phase of an ongoing expansion.

Currently, the plant produces about 14,000 tonnes annually against national demand of an estimated 80,000 metric tonnes.

Annual sugar imports cost about $35 million (about Rwf28 billion).

Madhvani Group, which owns the plant, says the ongoing expansion will see the plant increase production capacity by 7000 tonnes, with the second phase of the project set to begin. 

According to Farhan Nakhooda, the group’s project director, they are also exploring the third phase scope and have requested the government for additional land as well as commissioned a survey to establish the scheme of further development. "The capacity of the plant, at the end of phase one, we will be 21,000 tonnes of sugar and we are currently producing 14,000. You might not see it happen immediately because after the land is ready for planting will take additional months for the cane to mature. Phase 2 will drive up production to 28,000 tonnes per year,” he told The New Times yesterday.

Nakhooda said that they have found the current Public private partnership (PPP) model to be relevant in scaling up operations as their land parcels are in between farmers’ parcels.

"We have to work jointly with local farmers to do it.  To get the full participation of the farmers through the assistance of local administration and the Ministry of Agriculture, makes a big difference. By doing it as PPP we ensure that farmers benefit and participate in the process. We have formed nine cooperatives in the last two years and have formed seven water management associations,” he said.

In the second phase of the project, which begins mid this year, he said that communities living in the neighbourhood of the plant will benefit as they will introduce steel barges to transport sugarcane as opposed to the wooden canoes currently in use.

In the initial proposal for the expansion project, which is worth about $75 million (about Rwf60 billion), the firm had plans to venture into energy generation, where they planned to produce 12 megawatts and six million litres of ethanol annually.

However, Nakhooda said that they are set to open negotiations with the Ministry of Infrastructure and Rwanda Energy Group to have guaranteed market for energy which will determine their investment.  

"If the Ministry of Agriculture and REG promise to buy, we will make higher capital investments and supply the power,” he said.

The firm is confident on the profitability of their ventures despite the drop in international commodity prices, noting that sugar prices have gone up by 50 per cent in the last one year.  

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 demand.

In a previous interview, the Rwanda Development Board chief executive, Francis Gatare, said that there are expectations by the Government that the firm would reduce the country’s reliance on imports and even promote exports of sugar.

editorial@newtimes.co.rw