Mandatory quota for Kenyan suppliers has boosted Tononoka Steel's fortunes.
Kenyan manufacturer Tononoka Steel says it has earned Sh400 million from the supply of metal to the standard gauge railway project.
The firm is a division of Tononoka Group of Companies owned by Kenyan billionaire industrialist Navin Savla.
“We have supplied 6,000 tonnes of steel worth over Sh400 million to date,” said Tononoka Steel chief executive officer Mahesh Pathak in an interview.
According to the Tononoka Group chief executive Rajagopalan Sathyamoorthy, the mandatory local quota for Kenyan suppliers has boosted the steel manufacturer’s fortunes coming at a time when steel makers in the country are battling the impact of downgraded prices globally. “This has been a boon for us,” said Mr Sathyamoorthy at the firm’s Dandora steel plant in Nairobi.
The new standard gauge railway is expected to ease transport of goods and people from Mombasa to Nairobi, and later on to the Malaba border and onwards to Kampala.
The Sh327 billion Mombasa to Nairobi SGR section being built by China Road and Bridge Corporation (CRBC) is set for completion by end of June next year.
Reports earlier this year that foreign suppliers had received Sh167 billion from the SGR project implied that only a small share had gone to local firms, prompting President Uhuru Kenyatta to fault the Chinese contractor for failing to honour an agreement to buy up to 40 per cent of materials and services locally.
Four other Kenyan steel manufacturers which are also supplying the Chinese contractor include Devki Group, Apex, Steel Makers and Prime Steel.
Tononoka Steel says it hopes to make more money in the second phase which covers the Nairobi to Naivasha section and whose construction is underway.
The 120km stretch is expected to consume large volumes of steel and other raw materials with its 74 bridges and seven tunnels in the rugged Rift Valley terrain.
To deal with projected increased demand Tononoka Steel, whose market has primarily been driven by the local construction industry, has set aside Sh2 billion for expansion of its factory.
The manufacturer produces steel bars from industrial scrap. It has bought a 12-acre piece of land to upgrade its production capacity. Its plant, bought from Citi Engineering in 2005, employs 500 workers.
“We hope to complete the new plant by end of 2017, which will allow us to upscale our production from 250 tonnes per day to about 600 tonnes,” said Mr Sathyamoorthy.
“The new plant will also employ an additional 300 taking our group staff total to 1300.”
The firm has another plant in Embakasi. Steel rails are not produced locally and hence local firms are supplying steel for bridges and civil works such as culverts.
Earlier, CRBC raised questions on the quality of locally made steel, a factor which it noted had seen most players lose out on supply contracts.
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