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The government is considering a write-off on some of the debt owed by East African Portland Cement as the short term revival measures of the cement firm.
The firm currently owes a whopping Sh13 billion in debt to both government and private suppliers.
This has seen the firm unable to meet its salary and tax obligations to employees to a tune of Sh1.5billion according to the submissions presented before the Public Investments Committee on Commercial Affairs & Energy.
Appearing before the Committee chaired by Pokot South Member or parliament David Pkosing, Industrialisation Principal secretary Juma Mukwana said engagements are on to ensure that the cement firm is not dissolved.
“We have a six-point plan that will revive the company and get it back to operations. We are currently engaging with the treasury and the other shareholders on securing a strategic investor to pump in funds into the firm,” said Mukwana.
The committee sought to know from the PS why the firm should continue operating yet the government stopped injecting more funds into the cement maker.
Pkosing pointed out that the plan seemed like a deliberately choreographed scheme to ensure that East African Portland Cement goes down to the benefit of its competitors.
“The company has been unable to meet its liabilities; from the full estimates it will require about Sh20billion to get it back to full operations can the PS tell us where this money will come from?” asked the Chair.
The PS said the sale of huge land tracts held by the cement maker were among short term considerations to ensure the company doesn’t go under.
The disposal of the land assets got the cabinet approval under president Uhuru, and the company is yet to dispose the off.
EAPC has been on a loss making streak but it’s gross loss witnessed a reduction to Sh782 million between June 2021 to June 2022 from Sh821 million in the previous financial period, a five per cent drop.
It’s liabilities exceed the current assets by Sh10.7 billion an indication of negative working capital for the company.
Among the considerations the committee is proposing, is the restructuring of the debt which will likely involve writing off some of the debt by government.
The Public Investments Committee on Commercial Affairs & Energy is also proposing that once a strategic investor is found KRA structure a way to collect the tax due.
The Company also defaulted on a loan from one of the key lenders in September 2019, which prompted the shareholders’ approval to dispose of some of the idle land to retire the debt.
The committees Vice Chairperson and Rangwe Constituency MP Lilian Gogo, questioned the PS on why EAPC should continue to operate if once all the debt is repaid it will not have assets to attract major investors.
“The firm owes Treasury Sh2 billion, and the sale of the planned land which is currently occupied by squatters will bring in Sh5billion. Where will the remaining Sh15billion come from?” paused Gogo.
According to the submissions the cement production plant continues to operate significantly below capacity due to working capital constraints, lack of essential spare parts and loss of market share to competitors. BY THE STAR