Cement manufacturers escalate the clinker import tax dispute

Bamburi Cement Ltd Trucks collects cement from a silo, a storage facility in the industrial area of ​​Nairobi, on May 24th, 2021. [Stafford Ondego, Standard]

A portion of cement manufacturers have reacted sharply to National Cement’s plans to lay off workers at its clinker production facility, claiming the company is playing a policy to get the government to raise import tariffs on clinker.

National Cement, a subsidiary of Devki Group, announced on Saturday that it was laying off workers at its factory in Kajiado County, citing low demand for the essential raw material used in cement production.

Devki chairman Narendra Raval said the company will send at least 860 employees home to work at its clinker production facility in Emali as demand has not increased and local cement companies prefer to import clinker.

It did so after 300 workers were laid off after the company closed its clinker brick plant in Mombasa.

In the past, Mr Raval has called for the import duty for clinker to be increased from the current 10 percent to 25 percent, as the country has sufficient production capacities.

However, major competitors Bamburi, Rai, Savannah and Ndovu Cement blamed the company, saying the brick problem was being addressed through a “collaborative initiative” involving National Cement.

They said the company is “insincere” on an industry-wide issue that has been addressed by major stakeholders.

“I don’t understand why National Cement is playing the game on such a sensitive long-term industry topic that has lasted over a year and involved the entire cement industry and key stakeholders, including National Cement,” said Benson Ndeta, chairman of Savannah Cement, in a joint statement on Monday.

He added that Devki is trying to strengthen the government to impose higher taxes on imports, a move that “would serve a player’s personal interests and expectations”.

Local cement companies have argued over whether to increase import tariffs on clinker, with National Cement and Mombasa Cement advocating a tax hike while the other four oppose it.

As a result, the industry, together with the Kenyan Manufacturers Association and the Ministries of Industrialization, Petroleum and Mining, and the National Ministry of Finance, set up a committee to deal with clinker production and consumption.

The committee, which presented its report in mid-September, recommended that industry be given a four-year window to increase its clinker production capacity, after which the state can raise import tariffs.

The cement companies noted that National Cement was involved in the discussions.

“I am surprised at what one of the actors said who participated in a detailed independent study for the industry,” said Seddiq Hassani, Managing Director of Bamburi Cement.

The clinker committee found that 40 percent (1.5 million tons) of clinker are imported, of which 60 percent are imported from Egypt for free.

It also found that locally produced clinker is currently 15 to 30 percent cheaper than imported clinker.

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