De La Rue to shut plant unless CBK gives it 10-year deal
De La Rue legal director Douglas Denham (left), and director of market development Mark Crickett field questions from MPs at Parliament Buildings on May 3, 2012. Photo/Billy Mutai
Currency printer De La Rue has insisted that it will divest from Kenya should a Joint Venture with the government fail to bind the Central Bank of Kenya (CBK) to print money at its two-decade-old Ruaraka plant.
The firm’s top management told a House committee on Thursday that the security printer will close shop and move elsewhere if a ten-year contract with CBK is not secured.
Mark Crickett, De La Rue’s director of market development, told the parliamentary committee that the financial viability of the Ruaraka plant would be seriously compromised if CBK does not print its currency there for 10 years.
This is the second time the firm has threatened to close down the firm –having hinted at the same consequence during the 2006 bidding for the ill-starred second-generation currency contract, which it won but wanted to print in Malta.
“We will find it very difficult to operate in Kenya without CBK, our only customer here, printing currency at our factory in Ruaraka. It will force us to go out to another country,” said Mr Crickett.
“We found it very difficult to sell 40 per cent stake to the Kenyan government. We had initially offered 25 because we projected that the company has good prospects due to its international links. We print currency for over 30 African countries in that factory,” added Douglas Denham, the legal director charged with joint venture negotiations.
The closure of the Nairobi plant will result to a loss of Sh1 billion that De La Rue ploughs back to the economy in levies and taxes, he added.
CBK has insisted it will not be bound by any “contract to print money at De La Rue” putting the deal where the Treasury wanted to sink at least Sh645 million at stake.
CBK governor Prof Njuguna Ndung’u told the Public Accounts Committee (PAC) chaired by Ikolomani MP Boni Khalwale that the bank has a legal mandate to procure currency whether locally or abroad “at competitive bidding and pricing”.
De La Rue was also invited to address concerns that the company’s equipment at Ruaraka was obsolete yet it is inviting investment of taxpayers millions in a venture that could turn expensive in the long run.
Joint venture
The firm defended its machinery saying it was up to date after upgrading three years ago.
The managers, who included Rob Hutchison and Stephen Prior, who flew into the country from London for the meeting, categorically stated that the best option for Kenya is to invest in the JV to secure its currency supply and its security.
“We have signed the joint venture and what we are awaiting is Treasury’s signatures to proceed. No additional capital will be required on the part of taxpayers to invest in the new company given that revenue projections show the business will sustain itself for five years,” Mr Crickett said.
The government will have a blocking vote to stop any further capital demand after initial investment in the joint venture, Mr Crickett added.
