Industry

Toyota Tsusho wins Sh103bn Kenyan fertiliser plant deal

fertiliser

Workers offload sacks of imported fertiliser at Mombasa port. FILE

Summary

  • Toyota Tsusho and Maruben, both Japanese companies, had been shortlisted to compete for the tender from a list of four international firms that had been pre-qualified for the contract.
  • Agriculture secretary Felix Koskei said Toyota defeated Maruben because it gave an undertaking of starting the project immediately as it had already made financing arrangements.

Toyota Tsusho has won the Sh103 billion ($1.2 billion) contract to build a fertiliser plant in the country, marking yet another big effort by the government to locally manufacture the vital farming input.

Toyota Tsusho and Maruben, both Japanese companies, had been shortlisted to compete for the tender from a list of four international firms that had been pre-qualified for the contract.

Making the announcement Tuesday, Agriculture secretary Felix Koskei said Toyota defeated Maruben because it gave an undertaking of starting the project immediately as it had already made financing arrangements.

“Toyota indicated that they have secured funding for the three phases from a reputable bank in Japan to put up a local manufacturing plant,” said Mr Koskei.
Kenya as for long had plans to put up a fertiliser plant to cut prices of the input, which inflates food prices.

In 1975, the government had picked KenRen, an American firm to manufacture fertiliser for domestic and export markets. The deal cost taxpayers tens of millions of shillings but never materialised.

READ: Kenyans have no choice but to pay Ken-Ren debt, says PS

The fertiliser plant, Mr Koskei said, signals affordable prices of the commodity and could see the current price drop by 40 per cent.

“Forty per cent of the cost of fertiliser emanate from the freight and handling charges at the port. But having a local plant in the country will see all these costs reduced, hence cutting down the price significantly,” he said.

Mr Koskei said the company, which will finance the whole project as a private venture, will start with a detailed feasibility study, the process that is expected to end in June this year.

After the study, the company will put up the first phase of the NPK fertiliser in Rift Valley, which consumes most of the fertiliser in Kenya.

“We are currently searching for land between Nakuru and Timboroa where we would construct the first phase of this project,” said the director and senior advisor for Toyota East Africa Dennis Awori.

Mr Awori pointed out that they intend to purchase at least 10 acres of land for constructing the plant.

The second phase is meant for production of Diammonium Phosphate (DAP), urea and Calcium Ammonium Nitrogen (CAN) fertilisers with the first production expected in 2016.