Bamburi faces petition in cement shortage row

Bamburi faces petition in cement shortage row
Published: 11 September 2007

Kenya Airports Authority’s announcement that cement supply shortage is to blame for delay in completion of phase one of the Jomo Kenyatta International Airport in Nairobi has kicked off a major falling out in the cement industry with one player revealing plans to file a historic anti-trust petition against its rival.  
 
Athi River Mining, the smallest but growing cement manufacturer by market share, says it is preparing to engage the Commissioner of Monopolies over unfair practices by market leader Bamburi Cement.  
 
The move comes a few months after Celtel filed a similar petition with the Communications Commission of Kenya (CCK) against its rival Safaricom over interconnection charges. In its petition, Athi River Mining (ARM) says it will be engaging the Commissioner of Monopolies over Bamburi’s creation of artificial shortages in the market to lock out other cement makers from lucrative supply deals, notably on multi-million shilling construction projects. ARM says Bamburi has been keeping it and  East African Portland Cement - the only other cement maker - out of lucrative supply contracts by insisting on single supplier deals. Bamburi Cement is said to armtwist contractors by threatening to pull out of supply agreements in which the buyer insists on top up consignments from other cement makers. Its rivals claim the giant cement manufacturer does this with the knowledge that the other two cement makers have no capacity to fully meet the needs of such contractors should it pull out.  
 
Bamburi Cement has a capacity of 1.6Mt while  East African Portland Cement (EAPC) and ARM manufacture 720,000t and 250,000t respectively.  
 
Bamburi’s rivals claim that this insistence on single sourcing by Bamburi forces contractors to contend with whatever the giant cement manufacturer is able to supply leading to delays in completion of key projects.  
 
Kenya Airports Authority (KAA) managing director George Muhoho on Thursday told journalists that an acute shortage of cement was partly to blame for delayed completion of phase one of the Sh2.6 billion JKIA expansion project, which is behind schedule by three months.  
 
Mr Muhoho said failure by Bamburi Cement to supply some 240,000t (4800 bags) of cement per day needed to keep the project on schedule is to blame for the delay. He said Bamburi was only able to supply between 100,000t (2000 bags) and 130,000 (2600 bags) per day.  
 
What has rattled the construction sector is the pronouncement by Mr Muhoho that the cement grade used in airport construction cannot be produced by Bamburi’s rivals ARM or  East African Portland Cement (EAPC). "We have been producing this grade of cement for over a decade on special order and with the certification of the Kenya Bureau of Standards," ARM deputy managing director Surendra Bhatia told The Business Daily.