The Kenyan Sugar industry is in a serious crisis due to cash flow challenges and inability to produce sugar cost effectively. The market is flooded with sugar from cheap producing countries. Diversification into ethanol manufacturer is one of the options to increase their competitiveness. This study examines the feasibility of establishing an ethanol plant for the 3000 tonnes per day (TCD) sugar factory from molasses produced. The study demonstrated the potential ethanol production at Nzoia Sugar Company to create an additional revenue stream. The process involves a series of stages starting with fermentation of the molasses. Ethanol formed is then channelled into distillation columns for fractionation to remove water. Further distillation and molecular sieve dehydration are also done to improve purity and quality of the final ethanol product. Careful analysis of this data revealed that indeed the company was incurring losses (on average ksh.3 billion) every year since 2010 and needed a magic stroke to turn around its fortunes. The analysis also revealed a projected ethanol capability of 11 million litres per year translating to net profit of over ksh.300million annually. Equipped with this information, design of major components of the ethanol plant was done. These included, fermenter, boilers, condensers, and distillation columns, all well sized and processes documented herein. With the setup and layout done, the bill of materials and other requirements was executed and an estimated capital investment of about ksh.6.9 billion projected. Financial evaluation of the project arrived at a payback period of 7 years being calculated from a figure of about ksh.350million profit annually. The project life was estimated at 40 years. Overall, these are very good figures that point towards a long-lasting financial solution for the collapsing sugar industry. Ethanol plant is sure the solution to the collapsing sugar industry.