Government now lays claim to Portland Cement land


Government now lays claim to Portland Cement land
East African Portland Cement Athi-River kiln PHOTO | COURTESY

In Summary

  • Munya says the government has approached Portland Cement board of directors with view of repossessing the land situated in Athi River for the construction of the State’s affordable housing units.
  • The pronouncement by the Industrialization Ministry spells doom for the survival of Portland Cement which had tied its hope on the clearance of outstanding liabilities through the sale of its vast idle parcels.
  • The new claim by the government sets EAPCC on a three -way collision course which also incorporates criminal gangs who have in recent years taken up space in the idle parcels of land further spelling doom on the continuation of the 86-year old manufacturer.

The government has now laid claim to nearly 4,500 acres of land belonging to the East African Portland Cement Company (EAPCC).

According to Trade and Industry Cabinet Secretary Peter Munya, the parcel of land in question was offered to Portland Cement on a free-lease in 1960.

Further, Munya says the government has approached Portland Cement board of directors with view of repossessing the land situated in Athi River for the construction of the State’s affordable housing units.

“Portland has already exploited the cement material and the land is hence already mined. We have decided to take back the land and have asked the board to surrender the parcel,” CS Munya told Citizen Digital.

The Cabinet Secretary has shrugged off suggestions of an illegal takeover of EAPCC land maintaining records from the Ministry of Land are indicative of the government’s control of the parcel in question.

The pronouncement by the Industrialization Ministry spells doom for the survival of Portland Cement which had tied its hope on the clearance of outstanding liabilities through the sale of its vast idle parcels.

“Given the enormous resources in the form of idle and fully mined parcels of land, the board expects to be granted the necessary approvals to generate value from the parcels,” read EAPCC’s statement accompanying its six-month financial results for the period ending December 2017.

EAPCC had proposed to employ the bulk proceeds from the transaction to unlock the company’s much needed working capital while wiping off its Ksh.7 billion debt stock accruing in-part to the KCB Group and the Japan International Cooperation Agency (JICA).

The debt-restructuring plan had at June 2018 received impetus from the Ksh.11.3 billion gain in the company’s property valuation to bring its present net pricing of the firm’s land parcels to Ksh.27.2 billion.

Portland Cement would from the welcome revaluation see its 2017/18 net earnings jump to Ksh.7.8 billion to break a poor run of earnings.

With the KCB Group receiving Cabinet approval to attach itself to Portland property, the giant cement manufacturer has walls closing in on its existence as the government claims the very parcel of land that was to free up the firm’s cash-strapped balance sheet.

Plunder

Years of managerial improprieties have left Portland Cement gasping for life as the reality of financial plunder and growing inefficiencies stack up on the firm.

The gloomy outlook for the firm has seen the group’s current liabilities outstrip current assets by Ksh.6 billion as at June 30, 2018 in spite of the company’s strengthened net asset value raising material uncertainty as an ongoing concern for the manufacturer.

“Material uncertainty exists that may cast significant doubt on the group’s ability to continue as an ongoing concern,” stated Delloite & Touche opinion of the firm’s audited financial statements for the 2017/18 financial year.

EAPCC revenue for the year slid to Ksh.5.2 billion with cement sales dwindling by 15 percent to Ksh.5.3 billion on the back of falling cement demand in the country and inflated operational inefficiencies.

The manufacturers half year earnings at the end of December 2019 similarly sliding with EAPCC registering an expanded Ksh.1.26 billion from an original loss of Ksh.969.5 million in 2017.

The new claim by the government sets EAPCC on a three -way collision course which also incorporates criminal gangs who have in recent years taken up space in the idle parcels of land further spelling doom on the continuation of the 86-year old manufacturer.

Earlier on Thursday, the firm declared all of its job-posts redundant with a view of cutting further down on costs in an efficiency quest damaged by an estimated Ksh.8 million in losses on a daily basis.

The firm aims at trimming its 821 staff members by at-least one third in the second round of lay-offs having sent over 700 staffers home between August and June this year.

Staff costs at the end of June last year accounted for Ksh.2.3 billion of the firms’s total operating expenses.

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Story By Kepha Muiruri
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