ARM on the spot over blending of fertiliser

The government is investigating if Athi River Mining Ltd (ARM) is breaching the conditions of a grant with Japan by blending fertiliser meant for sale to farmers.

Agriculture minister William Ruto said ARM was holding the government-labelled fertiliser legally after buying it from Supplies and Services (S&S), a firm that he said had won a competitive tender to buy the product from the government.

Documents released by ARM yesterday indicate that the government allocated S&S a total of 1,397.45 tonnes of DAP fertiliser and a further 1,152.78 of CAN.

In a letter to the former National Cereals and Produce Board (NCPB) managing director, Gideon Misoi, suspended Agriculture PS Romano Kiome said S&S was free to collect the consignment from NCPB after providing a bank guarantee as specified in the tender terms.

“This was a grant that the Japanese government extended to Kenya in form of fertiliser on condition that it be sold to the private sector and the money used by the government. What we are investigating is whether ARM is violating any conditions of the grant or laid down quality standards by blending it,” said Mr Ruto.

The Japanese fertiliser was shipped into the country in bags marked with a government logo, but ARM is mixing the product with other ingredients to make its own brand called Mavuno, raising fears of adulteration among quality officials.

ARM officials yesterday displayed documents showing certification of the Mavuno brand by the Kenya Bureau of Standards (Kebs), the public standards custodian.

The minister’s comments on Wednesday afternoon marked a hasty retreat from a statement he issued in the morning after touring ARM premises in which he had expressed shock at the discovery of the consignment.

ARM officials brushed off claims that they could be compromising quality or making large profits margins by blending, saying their brand had become known in the country over its six years of existence.

“We are in a clean business, buying government fertiliser from a company that won an open tender and we are blending it to suit different soils and zones because Mavuno is a crop-specific fertiliser,” Surendra Bhatia, ARM’s deputy managing director, told Business Daily.

ARM, a firm established in 1974 by Mr H.J Paunrana as a mineral, extraction and processing company, was listed on the Nairobi Stock Exchange in 1997.

It has extended its operations into Tanzania, Zambia and South Africa and produces a range of products including cement, lime, sodium silicate, industrial minerals, fertilisers, and special building products.

Mr Bhatia said fertiliser business accounted for only five per cent of the company’s annual revenues.

ARM is among the firms that have established factories within East Africa to blend crop and soil-specific fertilisers.

“Blended fertilisers are the standard methodology that enhances yields in most developed countries. ARM uses generic fertilisers as raw material in the manufacturing of blended fertilisers and hence it was not illegal repackaging any fertiliser,” said Mr Bhatia

The latest fertiliser saga comes amid complaints that the government’s subsidy programmes were not reaching the intended beneficiaries due to poor management at the NCPB.

Mr Booker Owuor, a researcher at Sower Solutions, said poor controls at NCPB stores have created loopholes for profiteers to cart away consignments meant for the poor.

Mr Ruto said about one million bags of fertiliser were awaiting clearance at Mombasa port and would be available to farmers soon.

The fact that NCPB officials did not have information of an allocation done by its former managing director at the beginning of last month also cast a dark shadow over reforms that the government has been carrying out at the parastatal to make it more transparent.

Early last year, the government shelved the maize flour subsidy programme after most of the consignment meant for the poor ended up with well connected businessmen.

The US government also sidestepped the NCPB in its Sh40 billion credit guarantee scheme for importation of maize over corruption allegations and opted to support private sector