'Guru' Narendra Raval: Inside Devki billionaire's bid to control Kenya's cement business

Narendra Raval

Devki Group of Companies chairman Narendra Raval. The billionaire says Kenya Power gave him a Sh2.8 billion quotation to connect electricity to his clinker-producing factory in Emali. 

Photo credit: Diana Ngila | Nation Media Group

Five cement makers have put up a spirited fight against a fresh plot by billionaire Narendra Raval Guru to control the lucrative clinker market.

Mr Raval, also known as Guru, through his company National Cement, is once again pushing for enhanced import duty on clinker, the main ingredient for the manufacture of cement, as the steel magnate eyes some Sh8.3 billion that factories without grinders pay to import the crucial raw material.

The tycoon, whose Devki Group also has an iron grip on the steel sector, is understood to have been given an ear by the new administration of President William Ruto as it prepares its first budget for the upcoming fiscal year starting July.

Finance ministers from seven member states of the East African Community (EAC) will soon agree on common external tariffs (CET) that will guide the trade between the regional bloc and countries outside the EAC.

Most of the goods and services are traded duty-free between EAC countries, but a CET is levied on goods coming from nations outside the trading bloc, with clinker attracting an import duty of 10 per cent.

The Athi River-based National Cement, which has the largest limestone deposits, the main material for clinker production, wants import duty on clinker raised to 25 per cent.

But just like in an earlier attempt, five cement manufacturers -- Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot Limited -- have fought back, arguing that this would create an unfair playing ground, with only two players, National Cement and Mombasa Cement, dominating the industry.

In this meeting, unlike in the earlier one in Financial Year 2020/21, Mombasa Cement was non-committal on the proposed increase of duty, leaving National Cement a lone ranger in the hunt for the billions of shillings in imported clinker.

During the forum between the State Department of Industry and the Kenya Association of Manufacturers (KAM) on the proposed increase of duty on clinker that was held on January 31, Mr Raval's National Cement argued that the country had enough capacity to produce clinker.

“National Cement reported they have fully integrated plants in Athi River, Mombasa, Emali with a clinker production capacity of 4.5 million tonnes per annum and a new one in West Pokot, which has a capacity of 2.5 million tonnes per annum and a total combined was seven million tonnes per annum,” reads minutes in the meeting that was chaired by the PS for State Department for Industry Juma Mukhwana.

The event was also attended by Mr Abubakar Hassan, PS for the State Department of Investment Promotion.

In a sharp rejoinder, however, the other five cement makers argued that raising duty on clinker would result in unfair competition, with the quality of clinker not being guaranteed.

They said they had already been given a grace period of four years lapsing in 2026 to build their own grinders.

The other five players are expected to put up individual clinker investments worth $1 billion (Sh125 billion).

Such investments normally take about 22-36 months to be installed and commissioned.

They said locally produced clinker was supposed to be significantly cheaper than imported one.

“But this was not the case as local producers peg their prices to the landed cost of imported clinker,” reads the minutes.

During the meeting, there was a recommendation for a preliminary analysis of the impact of changing the duty on clinker through a temporary suspension of the 10 per cent duty to a higher tariff of 25 per cent.

“Preliminary findings point to flooding of cheap cement from Uganda and Tanzania and significant loss of export opportunities to other EAC Partner States’ markets,” reads the minutes.

Interestingly, all the companies, including National Cement and Mombasa Cement, have continued to import clinker, pointing to either the need for them to blend quality or the lack of capacity by the grinding plant to operate optimally.

Last year, National Cement of Kenya, together with National Cement of Uganda, shipped 691,501 tonnes of clinker to the port of Mombasa, with 398,200 tonnes of this going to Uganda, according to data seen by the Business Daily.

National Cement of Kenya remained with 293,301 tonnes of the imported clinker.

In 2021, two of Mr Raval's cement companies imported a total of 384,215 tonnes of clinker.

Bamburi, together with its Ugandan subsidiary of Hima, had the second-highest quantity of imported clinker at 389,430, a drop from 539,860 the previous year.

Mombasa Cement imported 245,010 tonnes of this raw material last year, down from 249,505 in 2021.

Rai Cement shipped in 99,000 tonnes of clinker last year, a drop from 195,150 in 2021.

Riftcot, together with Savannah, imported only 47,000 tonnes of clinker last year, a drop of 92 per cent from 587,963 tonnes in 2021.

With Kenya importing clinker at a higher tariff of 25 per cent, the other member states will buy the commodity at a lower rate of 10 per cent, according to Mr Hezekiah Okeyo, Industrialisation secretary in the State Department for Industry.