Kenyan Firm pockets Sh610m from SGR cash payout to land owners

East African Portland Cement Company (EAPCC) has received Sh610 million compensation in respect of land acquired for development of the Standard Gauge Railway, shielding the cement maker against vicious land grabbers preying on its land.

The exceptional payout is a major boost to finances of the cement maker, which has been in the loss making territory.

Transaction details seen by The Standard show that Kenya’s oldest cement manufacturer sold about 102 acres (42.989 Ha) to the National Land Commission (NLC), which is acquiring land on behalf of the Government. This means the EAPCC was paid about Sh6 million an acre for the piece hived from one of its biggest land parcels.

EAPCC Managing Director Kepha Tande confirmed to The Standard that EAPCC has already received the money. “We have the money and it has been ploughed back into upgrading our plant. There are also major developments going on that need additional funds,” explained Tande in a phone interview. The firm has also applied for a Sh2.5 billion loan from Kenya Commercial Bank to finance other ongoing projects.

The Kenya Railways Corporation (KRC) plans to pay up to Sh10 billion to landowners whose property was acquired for the development of the 609-kilometre Mombasa-Nairobi railway line. Private individuals own the bulk of the 12,000 acres that the State acquired for the SGR project.

This now makes EAPCC one of the single largest beneficiaries of the railway project alongside national parks and individual land owners.

The decision to pay EAPCC was made in October 2014 after the land commission did a valuation. The sale deal is a major relief for the firm, which is locked in legal battle with land grabbers. The payment will also vindicate EAPCC as the rightful owners of the land. EAPCC has four parcels of land that are currently encroached by outsiders.

In making the payment, NLC valued the land at Sh531million.

Incorporated in 1933, EAPCC is the first cement manufacturer established in the East and Central Africa region and has over 16,000 acres of land in Athi River. EAPCC which is listed on the Nairobi Securities Exchange (NSE) reported a full year net loss of Sh385 million in 2013.

Its market share has also slipped from 20 per cent in 2013 to about 17 per cent, as new entrants disrupt the status quo in the lucrative cement market. Before the land sale, the firm was staring at the prospects of another loss this year having already announced an after tax loss of Sh67.8 million for the six months to December last year.

The half-year loss was against a Sh183.4 million profit recorded in a similar period the previous year (in 2013). The loss forced the firm to withdraw from a promise to pay dividends to its shareholders. It had hoped to pay Sh0.75 dividend per share.

The Government and the National Social Security Fund (NSSF) have a combined stake of 52 per cent in the cement manufacturer. French company Lafarge is the second biggest shareholder in the firm with a 41.7 per cent interest.