Mark Kapchanga
28 September 2009
Nairobi — The Office of the President has confirmed that the groundbreaking ceremony for the "ultra-modern" cement plant to be put up by India's largest cement manufacturer, the Sanghi Group, in the Ortum/Sebit area in Kenya's Pokot district, will go on despite the controversy that has recently flared up around it.
Confidential correspondence between the Sanghi Group and the Office of the President obtained by The EastAfrican indicates that the ceremony, to be presided over by President Mwai Kibaki, will take place on October 31 and will be attended by Prime Minister Raila Odinga and the Sanghi Group's directors from India, Dubai, Tanzania and Canada.
"Our group chairman, Alok Sanghi, and other board members of Sanghi Cement Group of India, which own and manage the world's largest single-stream cement plants, thank President Mwai Kibaki for having accepted our invitation to officiate at the auspicious groundbreaking ceremony," reads the letter addressed to President Kibaki.
The plant, which will be the first of its kind on the continent, will cost Ksh640 billion ($80 million) and is projected to produce more than 1.2 million tonnes of cement in two phases. Production is slated to begin by December 2011.
But one month before the establishment of the investment in the cattle-rustler infested area of Pokot, controversy rocked the grand project with two government ministries locking horns on who should be in charge of the country's mining activities.
The Ministry of Industrialisation and its Regional Development counterpart have differed sharply on the choice of the investor to establish a cement factory near the Uganda border. The latter wants Sanghi Group's contract nullified and even unilaterally gone ahead to tender the contract afresh.
In October last year, the government granted exclusive mining rights to Cemtech Ltd, Sanghi Group's local subsidiary, after the group was given a clean bill of health by the Ministry of Industrialisation, the Kenya Investment Authority, the National Environmental Management Authority (Nema), the County Council of Pokot and the Ministry of Environment and Mineral Resources.
According to Sanghi Group's managing director in charge of Africa investments Rajesh Rawal, his company carried out a study on cement in the Pokot area between January and April 2006 after which more than 40 meetings were conducted with the concerned government departments on the proposed cement project.
"In August, we prepared our business plan, which we then presented to the government and a public hearing was done on the proposed project. Four months later, the government approved our preliminary business plan. Later, in February 2008, our group was granted the prospecting mining rights licence by the County Council of Pokot and Commissioner of Mines and Geology for a lease period of 99 years," Mr Rawal said.
In March 2008, the Kenya Investment Authority accepted Cemtech's business proposal and granted it permission to commence its implementation of the Pokot cement project.
"In October last year, our group's international financial consortium submitted a letter of comfort worth $80 million to the government. We then contracted two firms -- MTL Consulting Company of South Africa and Ecowiz Ltd of Kenya -- to carry out an environmental impact assessment and an in-depth geological evaluation at the site," Mr Rawal added.
But now the Regional Development Ministry, through one of its arms, the Kerio Valley Development Authority (KVDA), is seeking the nullification of the mining rights granted to Sanghi Group, alleging that due process was not followed.
KVDA says it has the mandate to oversee mining activities in the country and therefore "due process" must be followed in selecting an investor for the mining of Pokot limestone.
The confusion deepened last week when KVDA advertised in two leading papers in the country inviting expressions of interest for the establishment of a cement factory in the Ortum/Sebit areas of West Pokot.
"The project is aimed at exploiting the Western Kenya market for cement and benefiting the region's people, who make up 40 per cent of the country's population. In addition to satisfying local demand, establishment of a cement factory in the region would boost foreign exchange earnings through supplying markets beyond the borders in Uganda, Sudan, Rwanda and Burundi," acting managing director of KVDA Julius Mutuaruchiu told The EastAfrican, adding: "We have put October 13 as the deadline for application submission."
Regional Development Permanent Secretary Carey Orege has supported KVDA's action, claiming it is for the "public good."
This has however been fiercely disputed by Industrialisation Permanent Secretary Prof John Lonyangapuo, who says the responsibility for mining lies with his ministry.
According to Prof Lonyangapuo, the presidential circular of last year accorded his ministry the mandate to spearhead Kenya's mining activities.
"The move by KVDA is illegal, null and void. The investment in the proposed cement project is purely a private undertaking and not a government project as purported by KVDA that the Authority wants to establish a cement project," Prof Lonyangapuo said, adding: "There is already an investor on the ground, Cemtech Ltd."
The Industrialisation Permanent Secretary told The EastAfrican that, at a meeting held in April this year at the KVDA Plaza, Eldoret, and attended by a team from KVDA, the Commissioner of Mines and Geology, the Kenya Investment Authority and Mehta Group -- another investor interested in the project and reportedly favoured by KVDA -- it was agreed that since there was an investor already on the ground, Mehta Group should wait until 2010 to allow evaluation of the progress made by Cemtech Ltd.
"The advertisement made by KVDA at this point in time is misguided and unwarranted. This is not only meant to scare away the investor who has already incurred huge costs in carrying out feasibility studies but to discourage potential future investors in the cement sector in the country," Prof Lonyangapuo said.
Sources said that KVDA, under its parent Ministry of Regional Development, is fronting the Mehta Group. But KVDA alleges that due process was not followed in the search for a limestone mining company in the area.
"KVDA is not fronting Mehta Group. We only want to ensure that the country's mining regulations are adhered to," Mr Mutuaruchiu told The EastAfrican.
The move by KVDA sparked angry protests in West Pokot last week as thousands of people held peaceful demonstrations in Kapenguria and Makutano.
Led by the County Council of Pokot chairman David Moiben, the residents claimed KVDA had previously derailed limestone mining in the area.
"We are determined to bring cattle rustling and unemployment to an end. This will only happen when a cement plant is established in Pokot area," Mr Moiben told The EastAfrican.
This is not the first time such a controversy has erupted in the area.
Six years ago, residents demonstrated, demanding and getting the cancellation of mining rights granted to Uganda-based Kavee Quarries Ltd after the company failed to put up a cement plant in the area claiming lack of power.
Instead, it ferried limestone to Tororo, almost 300 kilometres away, for cement processing.
But Prof Lonyangapuo says KVDA's "desperate" move will not stop Cemtech Ltd from putting up the cement plant in Pokot.
The EastAfrican has established that the final "in-depth" geological evaluation report was received on August 18 from MTL Consulting Company Ltd. The company had been contracted by Cemtech to carry out the evaluation exercise that lasted nine months.
"Our project teams have worked round the clock between January 2006 and August this year to carry out various project studies. The government approved our December 2007 business plan and subsequently other government authorities granted us mining permissions and licenses," Mr Rawal said.
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