Lafarge SA’s (LG) Kenyan unit said a
dispute with the government over control of the company is
hampering plans to more than double its production capacity over
the next five years.
East African Portland Cement Co., or EAPCC, has been embroiled in a disagreement with the government for at least the past two years over ownership of the company, Chairman Mark ole Karbolo said in an interview yesterday from Nairobi, the capital. That may stall plans to increase its output of clinker, the main ingredient in cement, to 5,000 metric tons a day from 2,000 tons, he said. The government is concerned that Lafarge may have a dominant position in Kenya’s cement industry.
“The core problem is political interference where the ministry of industrialization wants to usurp and directly influence the role and power of the board,” Karbolo said. “Should the situation remain this way, it’s going to create difficulties in maintaining a united board.”
Cement-production capacity in East Africa is forecast to surge 89 percent to 17 million tons per annum over the next four years, as growth in the construction industry outpaces economic expansion in the region, Cardinal Stone, a Lagos-based investment bank, said in an Oct. 29 research report.
Lafarge owns 42 percent of EAPCC, while the Kenyan Treasury holds 25 percent and the state-controlled National Social Security Fund has 27 percent. A task force appointed by President Uhuru Kenyatta last year found that the cement producer doesn’t qualify to be labeled as a state-owned company because the National Social Security Fund shares belong to its members, and not to the state.
Lafarge, which is the world’s second-biggest cement producer and is based in Paris, also controls 59 percent of Bamburi Cement Co., the country’s largest cement producer by market volume, which in turn owns 12.5 percent of EAPCC.
The Competition Authority of Kenya is preparing a report on whether Lafarge has a monopoly in Kenya’s cement industry, Elizabeth Ntonjira, head of communications at the Nairobi-based agency, said in an interview yesterday.
“We will present a report on whether or not the cross directorship in Lafarge leads to unwarranted concentration of economic power,” she said, without saying when the report will be released.
East African Portland Cement Co., or EAPCC, has been embroiled in a disagreement with the government for at least the past two years over ownership of the company, Chairman Mark ole Karbolo said in an interview yesterday from Nairobi, the capital. That may stall plans to increase its output of clinker, the main ingredient in cement, to 5,000 metric tons a day from 2,000 tons, he said. The government is concerned that Lafarge may have a dominant position in Kenya’s cement industry.
“The core problem is political interference where the ministry of industrialization wants to usurp and directly influence the role and power of the board,” Karbolo said. “Should the situation remain this way, it’s going to create difficulties in maintaining a united board.”
Cement-production capacity in East Africa is forecast to surge 89 percent to 17 million tons per annum over the next four years, as growth in the construction industry outpaces economic expansion in the region, Cardinal Stone, a Lagos-based investment bank, said in an Oct. 29 research report.
Lafarge owns 42 percent of EAPCC, while the Kenyan Treasury holds 25 percent and the state-controlled National Social Security Fund has 27 percent. A task force appointed by President Uhuru Kenyatta last year found that the cement producer doesn’t qualify to be labeled as a state-owned company because the National Social Security Fund shares belong to its members, and not to the state.
‘Monopolistic Stake’
Kenya’s government wants Lafarge to dilute its shareholding in EAPCC because “government cannot allow a foreign company, or even a local company, to hold a monopolistic stake in an industry because this will be detrimental to consumers,” Wilson Songa, permanent secretary in the Industrialization and Enterprise Development Ministry, said in a phone interview on Feb. 12.Lafarge, which is the world’s second-biggest cement producer and is based in Paris, also controls 59 percent of Bamburi Cement Co., the country’s largest cement producer by market volume, which in turn owns 12.5 percent of EAPCC.
The Competition Authority of Kenya is preparing a report on whether Lafarge has a monopoly in Kenya’s cement industry, Elizabeth Ntonjira, head of communications at the Nairobi-based agency, said in an interview yesterday.
“We will present a report on whether or not the cross directorship in Lafarge leads to unwarranted concentration of economic power,” she said, without saying when the report will be released.
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