July 13, 2008 / 2:06 PM / 11 years ago

Kenya court halts $370m sugar, biofuels project

NAIROBI (Reuters) - A Kenyan court has temporarily halted a $370 million sugar and biofuels project in a coastal wetland that conservation groups warned would threaten wildlife and local livelihoods.

The government and the country’s biggest sugar miller, Mumias, wants to plant cane on 20,000 hectares in the Tana River Delta to create jobs and plug an annual 200,000-tonne sugar deficit.

But the Malindi High Court ruled on Friday that environmentalists and groups representing local livestock keepers could apply for a judicial review, according to a copy of the order seen by Reuters on Sunday.

“This decision will make supporters of the project reflect on some of the issues raised at the public hearings,” said Steve Itela, director of Kenyan campaigners Youth for Conservation.

“This should never have needed to go to court.”

Kenya’s National Environmental Management Authority (NEMA) cleared the project last month. But it has run into fierce opposition from activists who say it threatens 350 species including birds, lions, elephants, rare sharks and reptiles.

They accuse NEMA of ignoring a study showing irrigation in the area would cause severe drainage of the Delta, leaving local farmers without water for their herds during dry seasons.

Mumias, which owns 51 percent of the Tana Delta project, hopes to produce about 23 million liters ethanol — which is distilled from molasses, a cane by-product — there each year.

It says it will also generate 34 megawatts of electricity and create some 20,000 direct and indirect jobs, partly through the construction of an 8,000-tonne a day sugar mill.

The government, which has a 30 percent stake, says the project will benefit locals and that it has its full support.

Kenya produced 475,670 tonnes of sugar in 2006, and Mumias projects that it will generate an extra 200,000 tonnes annually from the Delta project.

Mumias chief executive Evans Kidero told Reuters in an interview on Thursday the firm was operating at full capacity again after post-election violence at the start of the year disrupted production and transport.

The company’s pre-tax profits for the half-year ending December 2007 surged 38 percent to 564 million shillings ($9.11 million) from 436 million in the same period a year before.

Mumias, which is 20 percent owned by the government, currently produces 300,000 tonnes of sugar a year, 90 percent of it from some 66,000 smallholder farmers.

(For Reuters Africa coverage and to have your say on the top issues, visit africa.reuters.com/)

Editing by Matthew Jones

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