Kenya’s cement firms protest over Chinese contractor’s SGR imports
By Moses Michira | July 9th 2015
NAIROBI: A Chinese contractor has been accused of going against a pledge to buy cement from local manufacturers, which could frustrate the anticipated benefits of the Sh370 billion Standard Gauge Railway project.
Two of the biggest local cement makers, Bamburi Cement and ARM, have accused China Road and Bridge Corporation (CRBC) of importing cement for the construction of the railway line in contravention of an earlier contract.
“There has not been transparency on how much we will supply, and we surely don’t understand why they are importing cement when we can clearly supply all cement to their specifications,” ARM Managing Director Pradeep Paunrana told international news agency Bloomberg.
EXPOSED TO LOSSES
Similar concerns were voiced by Bruno Pescheux, the CEO of Bamburi Cement, which is currently the largest producer in Kenya.
Bamburi claimed it had entered long-term contracts with transporters on the strength on CRBC’s pledge to procure cement locally, effectively exposing the firm to losses.
Mr Pescheux, however, reckoned his firm had delivered 20,000 metric tonnes of cement in April to the railway contractor.
Mr Paunrana is the chairman of the Kenya Association of Manufacturers (KAM), which lends more weight to the fears he has raised, as he speaks for more than just the family-owned company he heads.
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His disappointment is rooted in a pact entered in December last year when CRBC signed purchase agreements with local cement manufacturers, oil marketing firms and motor vehicle dealers. The Kenyan economy was expected to get a boost from the fresh demand for supplies.
“We have so far signed deals with local cement companies as our cement suppliers, such as Bamburi Cement and ARM Cement. We are also negotiating the cement supply contract with Savannah Cement, East African Portland Cement and other cement manufacturers,” CRBC’s procurement manager, He Yongjian, said in December.
“With the commencement of the project, these suppliers will provide cement to our campsites from time to time.”
But with the construction of the rail line almost half-way complete, according to CRBC’s estimates, local cement makers are getting disgruntled.
The Government has made it mandatory for public procurement projects to source at least 40 per cent of the value of all goods and services from the local market. Imports are only allowed if such goods are not available locally, and there is no capacity to manufacture them.
Ronald Ndegwa, the managing director of Savannah Cement, said his firm was “steadily supplying quality cement products to the SGR project”, but did not provide a breakdown of the amounts delivered so far.
A former CRBC casual worker confirmed the contractor was using cement produced by Savannah in the section around Athi River, which is where he was employed.
Mr Ndegwa said his firm was looking at infrastructure as a niche market, and has developed a higher-strength cement variant for this.
Grade specifications for the cement used by CRBC on the rail project differ from those used in housing developments.
Local firms would have invested additional capacities and technologies to provide the cement required for the 607km railway line between Nairobi and Mombasa.
CRBC, which had yet to respond to our questions by the time of going to press, has previously been accused of poor remuneration for workers on the railway project, with about 300 of them staging a go-slow in February.
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