Court blocks plan to dilute Lafarge stake in Portland cement

The government has been stopped from asking French conglomerate Lafarge to dilute its stake in Portland cement as the High Court seeks to establish whether the cement maker is a state-owned firm.

Justice George Odunga Thursday allowed activist Charles Omanga to oppose the government’s latest bid to have Lafarge reduce its interest in East Africa Portland Cement Company (EAPCC).

In 2012, the Competition Authority of Kenya issued Lafarge with an ultimatum to voluntarily offload part of its shares in Portland cement or have its stake in the company diluted by force under anti-trust laws.

The court will also review recommendations of a task force appointed by President Uhuru Kenyatta which say Portland does not qualify to be a parastatal because National Social Security Fund (NSSF) shares do not belong to the State but to contributors.

Mr Omanga wants this recommendation adopted in what will see the government lose the power to appoint the chairman of EAPCC, shifting the clout to French giant Lafarge.

“I have granted leave to commence judicial review in terms of prayer 2a, b and d,” ordered Justice Odunga.

“With respect to stay sort, the implementation of the decision of the presidential task force for the government to invoke the Competition Act and dilute shareholding of (Lafarge) in East African Portland be kept in abeyance.”

The prayers mentioned touched on Mr Omanga’s plea for the state to be stopped from interfering with Lafarge’s stake in regard to competition matters and the declaration of Portland as public and not state-owned.

READ: Lafarge spoils for a fight with State over Portland

This recommendation of the taskforce will see the State ownership in Portland drop below 50 per cent, given that the government has been treating NSSF shares as its own, making the cement firm a State corporation.

In Portland, the government’s stake stands at 25 per cent compared to NSSF’s 27 per cent, Lafarge (41 per cent) and the remaining six per cent is held by investors through the Nairobi bourse.

Lafarge also owns 58.9 per cent of Bamburi Cement and the government has accused the French firm of seeking to damage EAPCC in order to protect its interests in the rival cement maker.

Portland has been embroiled in a long and bruising shareholder war that is mainly centred around the government’s determination to have a new team shepherd the firm, a move that has been difficult with Lafarge’s upper hand in the board.