Kenya: Tororo Cement loses limestone tender deal to India’s Sanghi

Kenya: Tororo Cement loses limestone tender deal to India’s Sanghi
Published: 23 June 2009

Tororo Cement Industry has lost a limestone tussle to an India firm, almost three years after it expressed interest to exploit the rich deposits in Kenya’s Rift Valley Province.

Multibillion dollar Indian Sanghi Group is now set to invest US$80m (about KES112bn) in a cement plant in one of Kenya’s most arid areas.

The group’s local subsidiary, Cemtech, with the support of International Finance Corporation (IFC) is also seeking to invest in a one million tonne cement factory in Pokot District, and its official launch is expected to soon.

Tororo Cement factory, in early 2007 expressed interest in exploiting the extensive limestone deposits and has since then been tussling with Rift Valley’s Pokot District authorities for approval to extract the precious rocks.

The authorities, which had earlier on rejected the industry’s proposal since Kenya’s Ministry of Trade and Industry had plans to establish a state owned cement firm in the area allowed Tororo Cement to bid again after the exercise was re-advertised.

The Indian firm’s construction work is expected to last for slightly more than two years and will become East Africa’s second largest cement producer after Mombasa’s Bamburi Cement. Bamburi Cement controls the largest market share in the region.

The loss to Tororo Cement leaves the Ugandan cement manufacturer and local market controller with one opportunity to exploit Kenya’s resources since the factory is awaiting final a pronouncement of the firm that will win the bid to exploit limestone sediments at Eastern Kenya’s Mutumo District.

Pokot District where the limestone is located is one of the most underdeveloped areas in Kenya and the Sanghi Group has sought to upgrade the area’s road and railway network.

The company’s manging director says there is enough limestone in Uganda to supply input to the factory.

Tororo Cement according to a Kenyan source had equally promised to rehabilitate the area’s infrastructure incase it worn the bid.

But Tororo Cement Factory Managing Director, Brij Gagrani in a contradictory statement told Daily Monitor on phone on June 19 that the cement manufacturer had not expressed interest in the cement sediments.

"No, we do not have any interests in Kenyan limestone," he said on phone.

He said there was adequate limestone in Uganda to supply input to the factory.

Mr Gagrani also denied that TCI had expressed interest in exploiting Mutumo District limestone although sources and media reports hint that the industry was among firms bidding for the Eastern Kenya’s granite.

Currently, TCI extracts limestone as far as Karenga in Karamoja along the Uganda-Sudan boarder to cushion the declining deposits in Tororo District.

The depletion in limestone deposits in Tororo District has compelled the cement plant to stretch to far sediments, a development projected to increase costs of production and subsequently cement prices.

Cement prices in early April registered an eight per cent increase from KES25000- KES27000, a hike TCI Managing Director, Mr Gagrani attributed to the effect of factory maintenance and instability in the Uganda shilling, which he said was temporary.

Tororo Cement controls the largest share in the market with 55 per cent stake followed by western Uganda-located Hima Cement.

Despite the existence of the two cement firms in the country, cement remains one the industrial products Uganda imports from the regional market.