Taxpayers coughed up Sh1.44 billion to bail out State-owned firms in the year to June, with East African Portland Cement Company (EAPCC) #ticker:PORT being the latest to join those unable to pay debts.
This was an increase on the Sh1 billion the Treasury paid the previous year for State broadcaster KBC and Tana River Development Authority (Tarda), underlining the burden of settling parastatals debt.
The Treasury paid Sh387 million for the Nairobi bourse listed cement maker, Sh747 million for KBC and Sh309 million for Tarda.
“A new guaranteed loan by EAPC which had not been projected in the current period has been taken over by the government,” say Treasury documents.
Lafarge owns 41.7 per cent of EAPCC, the Treasury (25 per cent) and the NSSF (27 per cent) The company borrowed Sh1.7 billion in 1990 at a concessional rate of 2.5 per cent, but despite servicing it since 2000 it still has Sh3 billion to settle.
The loan matures in March, 2020, and is paid twice a year in March and September based on the prevailing exchange rate.
Ageing plant, State interference and board fights coupled with intense competition in the cement market has hurt Portland cement. It has been struggling to raise cash to modernise its plant.
The company’s revenues for the year to June dropped 21.8 per cent to Sh6.93 billion. Its losses stood at Sh1.7 billion against a profit of Sh3.7 billion the previous year.
The State broadcaster has been unable to repay a Japanese debt that has accumulated to Sh32.3 billion. KBC says the money was borrowed on the strength of cashflows expected from the sale of television permits – then pegged at Sh1,000 for every television set.