The Government on Wednesday moved to tame cartels in the sugar industry and bring down prices by cancelling licences for 16 sugar exporters.

Agriculture minister William Ruto said most of the sugar classified as being exported found its way in the local market, contributing to manipulation of the price.

He also said that the move would balance the marketing of local and legally imported sugar for the benefit of consumers and the Kenyan economy.

Exporters of raw and mill white sugar enjoy tax incentives - 16 per cent value added tax (VAT) rebate and a further four per cent exemption from the Sugar Development Levy.

"There is no way someone would get up to 20 per cent tax rebates and then go ahead and bring the sugar back into the country," Mr Ruto said.

The ministry's action is likely to affect the price of sugar in the wake of a global rise in food prices, but Mr Ruto could not promise an immediate drop in sugar prices.

Kenya has an estimated annual sugar consumption of 740,000 tonnes against a local production of 520,000 tonnes.

The names of the affected companies will be released once the decision is published in a Kenya Gazette notice as required by law.

However, Mumias Sugar Company, the biggest sugar manufacturer in the country, and Lubao Jaggery are the only firms exempted from the decision.

Mumias Sugar was excused because it is currently engaged in satisfying Kenya's quota as per the requirements of an international trade agreement.

Exports from Lubao Jaggery were restricted to jaggery products only.

Under the African, Caribbean and Pacific-European Union (ACP-EU) trade partnership, Kenya is expected to export 17,000 tonnes to the EU.

Protocol

The minister said that the quota was currently being met by Mumias Sugar.

"For this reason, the sugar company which is a licensed exporter, has been exempted from deregistration to enable it to export to EU countries only in accordance with the ACP-EU protocol," Mr Ruto said.

The minister, who was addressing a news conference at his Kilimo House offices, was confident that the action will eliminate market distortions.

Mr Ruto said that he could not understand why sugar was being exported when there was no surplus. "What business do we have exporting sugar, which is not even enough for us?" he asked.

He directed the affected companies to "follow the right communication channels to air their grievances" once the gazette notice is published.