Bamburi earns Sh1bn from cement supplies to rail contractor
Workers construct a bridge for the standard gauge railway in a section of Tsavo National Park. PHOTO | FILE
What you need to know:
Bamburi is among local firms contracted by a Chinese contractor to supply materials for the Sh327 billion project.
Chinese contractor CRBC last July said that Kenyan firms had supplied it material and services worth Sh23.5 billion, with only machinery and locomotives not available locally being imported.
Bamburi Cement says it has earned Sh1 billion from supply of cement to the standard gauge railway (SGR) contractor, making it one of the biggest gainers from the ongoing construction of the Mombasa-Nairobi line.
The cement maker is among local firms contracted by a Chinese contractor to supply materials for the Sh327 billion project.
Bamburi said in an interview that it has supplied 300,000 tonnes of cement to the rail project since September 2014, earning it “over Sh1 billion.”
“The SGR contract has increased our production by 10 per cent to more than two million tonnes per year,” said the company’s commercial director Geoffrey Ndugwa.
Other local suppliers of cement to the China Road and Bridges Corporation (CRBC) include the East African Portland Cement, ARM Cement and Savannah Cement.
The project intended to connect the port city of Mombasa with a high-speed railway line to Nairobi, running onwards to Kampala, Burundi and Juba.
Chinese contractor CRBC said it has contracted 600 suppliers.
The firm last July said that Kenyan firms had supplied it material and services worth Sh23.5 billion, with only machinery and locomotives not available locally being imported.
The Bamburi director said that bulk transportation of cement had doubled.
The Nairobi Securities Exchange-listed firm estimates that it will supply 150,000 tonnes of cement to the project this year.
The construction of the railroad has expanded the market for suppliers, boosting their sales volumes.
CRBC is required to allocate contracts equivalent to 40 per cent of the works to Kenyan firms, in a government policy meant to lift earnings of local firms, transfer skills and ease unemployment.
Foreign contractors undertaking public works are also required to allocate nearly half of the tenders to Kenyan investors.
Bamburi, a subsidiary of French conglomerate Lafarge, recorded 85.9 per cent growth in net profit for the half year ended last June at Sh3 billion, powered by increased sales.
Its share price has risen 14.6 per cent over the past year to the current range of Sh173 apiece.
The cement maker is also supplying the material to the ongoing construction of the 310-megawatt Lake Turkana Wind Power project in the northern town of Marsabit.
“The rehabilitation of 52km of Mombasa Road between Bachuma and Maji ya Chumvi will also involve the usage of Bamburi’s recently launched soil stabiliser called Roadcem, a first in the region,” the firm says.
The country’s cement manufacturing industry has been growing over the years, driven by heavy government expenditure by the on big ticket projects.
Private investors have also stepped up the market with new office blocks, shopping malls and high-end residential buildings.
Officials data shows cement consumption grew 12 per cent to 4.7 million tonnes in the first 10 months of 2015 compared to a production level of 5.3 million tonnes.
The SGR is expected to be completed by June 2017 and will significantly increase the speeds of cargo and passenger trains.
“Apart from jobs and revenues, we have sought to improve the quality of local works by setting standards to be met for firms to be awarded the tenders,” CRBC liaison officer Joseph Gitau said.
The firm last July opened a school in the coastal town of Voi to train Kenyans on railway construction, operation and management. The three-month course targets engineers, technicians and artisans.
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