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Pokot cement puzzle exposes rot in KVDA

FINANCIAL STANDARD
By | September 29th 2009

By John Njiraini

Coming fresh on the heels of the unsavoury saga that rocked the Kenya Bureau of Standards, the row between two ministries over a cement project in Pokot has left the Government with more egg on its face.

It has been spiced up by conspiracies, political patronage and hints of underhand deals that would make Graham Hancock’s 20 year-old bestseller, Lords of Poverty (an investigation of corruption in the international aid business) pale by comparison.

The unravelling saga rotates around a clear attempt by the Kerio Valley Development Authority (KVDA) to sabotage the construction of a cement factory in Pokot by the Cemtech Sanghi Group, despite having approved the project, with the company receiving the necessary licences, a process that has taken a painful three years.

However, it is the entry of the Mehta Group into the mix that has made the whole matter even more intriguing.

The Mehta Group is no stranger to controversy. Readers may recall that two years ago, the company attracted all the wrong publicity, with its plan to convert nearly 30 per cent (7,100 hectares) of Mabira tropical forest in Uganda, a famous sanctuary for rare birds and trees, into a sugar cane plantation, albeit with the tacit approval of President Yoweri Museveni.

The forest is a key carbon sink for the country, and the matter put the firm and President Museveni on a collision course with environmentalists and donors. Mehta Group eventually backed away from the deal, after riots and demonstrations rocked Uganda’s capital, forcing the Government to withdraw its support.

Now the firm’s name has been mentioned by no other than Industrialisation PS John Lonyangapuo, as being the reason for KVDA’s sudden change of face.

Pokot is among the driest areas in Kenya, much neglected by successive governments, and more famous for perennial cattle rustling.

Limestone deposit

However, nature has also blessed it with one of the richest limestone deposits in the East African region, and the stakes are high as the deal in question is a multi-billion project in the booming cement sub-sector.

According to statistics in the industry, local cement demand stands at 6.2 million tonnes annually and is expected to increase to 14 million tonnes by 2014.

A continuous boom in the building and construction sector, which recorded a seven per cent growth according to 2009 Economic Survey, will drive this.

Keen watchers wonder why Kerio Valley Development Authority (KVDA) decided to advertise for investors to build a cement factory in Ortum-Sebit/Chebichoi , West Pokot knowing clearly that a licensed investor, Cemtech Sanghi Group, was already on the ground.

It was not lost on them that it came soon after former KVDA managing director Mike Parklea was unceremoniously dismissed before expiry of his contract, and an Indian company, Mehta Group, entered the scene. According to documents obtained by Financial Journal, Cemtech was granted all the necessary approvals and licences to go-ahead with the project with the full knowledge of KVDA and the Ministry of Regional Development, headed by Westlands MP Fred Gumo. Out of 86 meetings the company has held concerning the matter and 296 correspondences, many have been with KVDA, the Regional Development PS Carey Orege and his boss, Gumo.

Yet Orege baldly declared his lack of knowledge about the same when contacted by FJ last week. "I am not aware of any approvals or licenses granted to Cemtech or any other company," said Orege last week.

Sour grapes

Documents in our possession indicate that things started turning sour in April this year, when the Mehta Group entered the scene. By then Cemtech had already pumped Sh300 million into the project to build a cement plant with a capacity 1.2 million tonnes a year.

The change of heart by KVDA was particularly curious given that it came just days after Cemtech announced that it had invited President Kibaki to lead the groundbreaking ceremony for the proposed plant next month.

Contrary to assertions that Mehta has been carrying out the necessary surveys, mapping and studies associated with an investment of such a magnitude since 2007, the company was introduced to the project this year.

Minutes of a consultative meeting between KVDA, the Department of Mines and Geology, the Kenya Investment Authority (KIA) and Mehta held on April 2 show this was the first time the company presented its "plans".

During the meeting Mehta, which was represented by two directors — Gajendra Batavia and Gajendra Srivastra — gave a profile of the company, its operations in various countries and proposed that KVDA facilitate it to put up a cement plant in Pokot.

On its part, KVDA informed the company that an investor was already on the ground, and the company had to wait until 2010, when an evaluation of progress would be undertaken, and if the investor on the ground failed to meet the target, then Mehta’s case would be considered. But the situation assumed an intriguing scenario, when the company sought the services of a consultancy firm associated with a former minister to advise it on how it could get the license for the project.

In a September 4, 2009 letter from the consultancy company and addressed to Glenn Investments Ltd, the local partners of Mehta Group, said it was willing to carry out the job at a cost of Sh1.5 million.

Bitter exchange

Among its terms of reference was to use its contacts at the highest level of Government to give effect of goodwill, intercede with KVDA to give effect to the parent ministry a declaration of helping to move the project forward, and liaise with the Ministry of Regional Authority to fast-track their declared interest.

Contacted by FJ, Mr Batavia refused to comment, saying the issue is in the hands of the Ministries of Regional Development and Industrialisation.

The two ministries were embroiled in a bitter exchange over the matter last week, with Industrialization PS John Lonyangapuo terming the advert by KVDA a "mockery" of his ministry’s roles.

"I have nothing to say on the matter. It is being handled by the two ministries," said Batavia. According to a September 18, 2009 letter by County Council of Pokot chairman David Moiben, and addressed to Batavia, Mehta is informed that as far as the council is concerned, Cemtech has been granted the mining rights for the project.

The rights, together with other exclusive prospecting and mining licenses from other government organs, were granted after Cemtech fulfilled all the conditions and requirements and provided the Government with a letter of comfort worth Sh6 billion.

"It is therefore a futile attempt for you to continue moving up and down Government offices in Nairobi purporting that the council has given you the consent," states the letter.

The letter is copied to, among others, the Minister for Regional Development and the PS Ministry of Local Governments.

This notwithstanding, Mehta has a knack for rubbing shoulders with the top echelons of the political class.

Last year the international head of the Mehta Group, Mahendra Nanjibhai Mehta was awarded a Head of State Commendation, and Prime Minister Raila Odinga visited the company’s cement plant while in a tour of India early this year. The company, which also has interests in the sugar, floriculture and horticulture industries and financial services, is also prone to controversies.

A source close to Cemtech told FJ that detractors of the company (Cemtech) claim it does not have any experience in the cement industry, because it has no known operations in Africa.

But documents in our possession indicate that the company was a shareholder of Hima Cement in Uganda between 1995 and 2000.

Jobs on offer

The move by KVDA puts the implementation of the project at a crossroads, something that could deny the local communities an opportunity for a better life and condemn them to a life of unending cattle rustling.

Cemtech’s implementation plans for the project shows that a total 700 jobs would be created directly, and another 1,000 indirectly. Low costs houses would be built, and a power plant with a capacity of 23 MW put up to supply electricity to the company and the local community.

If KVDA goes on with its plan to invite investors to submit their interests, Cemtech plans to file an injunction at the High Court, the source said.

If it goes to the courts, the project is bound to join a long list of investments that never took off due to controversies.

They include like the titanium mining in Kwale, the limestone battle between Bamburi Cement and Athi River Mining, and the sugarcane project in Tana River among others.

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