EAPCC unable to pay the loan in September and March, prompting the Treasury which had guaranteed the debt to take it over.
The Treasury paid Sh199 million in September and Sh200.35 million in March for the Nairobi bourse listed cement maker.
The firm 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.
Taxpayers paid Sh399.5 million for a loan that East African Portland Cement Company (EAPCC) #ticker:PORT owed a Japanese corporation, underlining the burden of settling parastatals’ debt.
The loss-making Portland Cement was unable to pay the loan in September and March, prompting the Treasury which had guaranteed the debt to take it over.
The Treasury paid Sh199 million in September and Sh200.35 million in March for the Nairobi bourse listed cement maker.
This has seen the EAPCC join the list of State-owned agency including Tana & Athi Rivers Development Authority (Tarda) and State broadcaster KBC, which have been unable to meet their loan obligations.
Taxpayers paid Sh382.6 billion for KBC in the nine months to September and Sh321 for Tarda, pushing the burden of clearing the debts in the period to Sh1.1 billion.
“A new guaranteed loan by EAPCC, which had not been projected in the current period has been taken over by the government,” say the Treasury documents.
Lafarge owns 41.7 per cent of EAPCC, the Treasury (25 per cent) and NSSF (27 per cent).
The firm 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 by intense competition in the cement market has hurt Portland Cement.
It has been struggling to raise cash to modernise its plant.
This comes as rival firms invest billions of shillings to cash in on expected rise in cement demand, fuelled by a burgeoning middle class with higher disposable incomes, as well as government-fuelled infrastructure expansion.
The company’s revenues for the six months to December dropped 19.4 per cent to Sh3.72 billion. Its losses narrowed to Sh533.7 billion in the half year compared to Sh745 billion in the same period a year earlier.
Portland’s debt dropped 36 per cent over the past four years to Sh1.4 billion as at June from Sh2.2 billion in 2013.
In 2011 the firm had swapped a portion of its Japanese yen denominated loan with dollars, a decision that has recently haunted it as the dollar gained against other global currencies, including the shilling.
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