State to bail out cement firm on Sh1.4b claim
The government will buy 900 acres of East Africa Portland Cement Company (EAPCC) land at an undisclosed fee to settle part of the Sh1.4 billion claim that workers were granted by court.
EAPCC is facing a crisis after the Court of Appeal ordered it to deposit Sh350 million in court as a condition to suspend an order allowing the sale of its property.
Industry, Trade and Cooperatives Cabinet Secretary Peter Munya said the land will be given to Kenya Railways for expansion of the Standard Gauge Railway, particularly the building of a new inland container depot. “As you know, Kenya Railways Corporation needs land to establish an inland container depot and EAPCC needs the money,” he said.
“Since they are government entities, an exchange has been agreed on and I want to assure all employees claiming money from the company that their dues will be paid since the solution reached will help the company make money for these payments as well as other urgent financial needs,” added Mr Munya.
EAPCC needs to sell between 6,000 and 7,000 acres of land for an estimated Sh10 to Sh15 billion.
However, being a listed company and a parastatal, the firm needs the Cabinet to approve the sale, which is expected to relieve them of debt, free their cash flows and make strategic investments.
EAPCC owes Kenya Commercial Bank Sh4.5 billion since 2014, part of a loan taken in 1978. Japan International Cooperation Agency is owed Sh1.4 billion while other creditors, including suppliers, are demanding about Sh3.5 billion.
The cement maker also needs Sh2 billion to put its machines back to full production capacity, which are currently milling 1.3 million tonnes of clinker but producing 600,000 tonnes of cement.
Munya said the challenges facing EAPCC were not new and that the government will do all it can to ensure that the company regains its lost glory.