Displaying items by tag: Kenya
Kenya reveals reasons for removing EAPCC directors
10 January 2012Kenya: Court papers have started to reveal why the Kenyan government may have dismissed the directors of the East African Portland Cement Company (EAPCC) on 22 December 2011. The papers allege that the board spent US$11m on goods without following competitive bidding and in another instance overruled the tender committee to vary the terms of a clinker contract.
"Those purchases were made by direct procurement or restricted tendering," an affidavit by acting Industrialisation Minister Amason Kingi said. "These processes were not authorised by the Public Procurement Oversight Authority."
According to the affidavit, the irregular purchases were made between 15 August 2011 and 30 November 2011. Mr Kingi said that the Kenya National Audit Office had raised a query over the expenditure of US$140,000 that was overpaid to the chairman, Mark ole Karbolo, and the suspended directors.
The affidavit also said that the board changed the terms of a contract to supply 140,000t of clinker after the supplier, Sanghi Industrial, requested to increase the price after supplying only 67,000t. After the company's tender committee rejected the increase, the board granted the variation which ended up costing the company US$850,000.
"The suspended board overruled the tender committee and awarded a price increase for the delivered products as well as for further products to be delivered," said Kingi. The government said that it could not reveal more without jeopardising a forensic audit currently under way.
The ousted directors have previously blamed their removal from office on a multi-million dollar tender that the government wanted swayed in favour of a local supplier. They said that the award of the kiln upgrade contract to South Korean firm, Posco Plantec, in late November 2011 had upset government officials who wanted the tender given to construction firm H Young for US$43m.
EAPCC's directors settled on Posco Plantec on the strength of its financial bid of US$21m. H Young, however, had a superior technical bid. Karbolo and three other directors, Titus Naikuni, Hamish Keith and chief executive Kephar Tande, are seeking to reverse the minister's decision, arguing that EAPCC is not a state-controlled company.
EAPCC switches clinker supply contract
30 December 2011Kenya: East Africa Portland Cement Company (EAPCC) has severed a clinker supply contract, thought to be worth hundreds of thousands of US dollars, with Bamburi, its anchor shareholder. The decision marks the end of a four-year deal that had raised questions over potential conflicts of interest due to common shareholding and market rivalry of the two listed firms. Although EAPCC is a listed firm, it is considered a state corporation, with the majority of its shares held by the government. This makes it difficult to import its own clinker due to stringent Public Procurement Oversight Authority's rules.
The cement maker has now signed a new deal for supply of clinker with rival National Cement, which will see EAPCC save about US$3.10/t. EAPCC's managing director, Kephar Tande, said, "We found out that other players were offering lower prices, which means we could leverage on lower clinker costs to improve our profitability."
EAPCC's decision to single source the supply of clinker from Bamburi alone raised eyebrows when it was signed in 2007. Bamburi, through its parent company Lafarge, controls 41.7% of EAPCC. Lafarge also holds a 73% interest in Bamburi Cement and until 2009 held a 15% stake in the country's other cement maker, Athi River Mining. Cross ownership of the three cement companies has in the past led to accusations of unfair business practices, including collusion over price setting.
National Cement MD, Raval Narendra, said that EAPCC was now its biggest client. "We are the biggest clinker importers in the region now because we have established contacts in Europe and the Emirates. We signed a supply contract with EAPCC for 0.15Mt for 2011," he said.
Investor battles to revive Rift Valley project
10 August 2011Kenya: Investors behind the US$148m plant in the Pokot region of Kenya have pledged to go ahead with construction, which has failed to take off 14 months after the ground-breaking ceremony. Directors have blamed the delay on various studies required before the investment.
“The Chinese contractors will be on the site soon,” said project director Rajeshkumar Rawal. “A general manager is already on the ground.” He rebuked industry talk that Indian plant builders Sanghi Cement had approached a local cement industry player insisting that local investors still held 26% of the stake with the Indian group taking the balance. Mr Rawal, a shareholder in the project, was in the thick of the battle to secure rights and licences for the project but he could not give a specific time frame promising more details in late August 2011 when Sanghi chiefs visit Kenya.
Some industry players have doubted the viability of setting up a factory in the remote area with poor infrastructure despite its proximity to the South Sudan which has strong potential for cement consumption.