South Africa’s Pretoria Portland Cement (PPC)
Group, the majority shareholder in Cimerwa cement company, is considering
buying the Rwanda government’s stake in the firm.
Cimerwa, under pressure from President Paul Kagame
to sell the government stake, put the shares on the market this past week.
Minister of Trade and Industry Soraya Hakuziyaremye
on Monday announced the sale. She said discussions are ongoing with
shareholders to determine who is willing to buy the stake.
The government has set July 5 as the deadline for
interested investors to bid for its stake.
The government has a 16.54% stake in Cimerwa, while
PPC has 51%. Other shareholders are the Rwanda Social Security Board (20.24%),
Rwanda Investment Group (11.45%), and Sonarwa Group (0.76%). The entire 49%
stake is up for sale.
Cimerwa chief executive Bheki Mthembu said that PPC
Group is doing a share valuation and will communicate its position in due
course.
“We see the government focusing on levelling the
playing field and opening up the market for more players, hence the need to
stay neutral in the cement manufacturing sector, which will encourage more
interest in the sector and spur growth,” said Mthembu.
In March, President Kagame said he had lost
patience with Cimerwa which had failed to produce enough cement for the
domestic market, making it more expensive than imports from the region.
Prime Minister Edouard Ngirente said the government
had given PPC up to the end of the month to decide on whether it would buy its
stake, after which the shares will be floated to the public.
Although Cimerwa has failed to meet domestic demand
for cement despite increased investment in the firm, its lacklustre production
came into the limelight when the market suffered a shortage after the
Rwanda-Uganda border closure in late February.
Cimerwa has continued to operate below its
production capacity of 600,000 tonnes. In 2018, it produced only 364,864 tonnes
of cement – less than 60% of the total demand. Rwanda was forced to import over
318,800 tonnes of cement to meet the demand of 640,455 tonnes.
When PPC bought the majority stake in Cimerwa in
2012, the firm hoped to turn its fortunes around, but this has not happened,
yet cement demand has kept growing over the years, largely due to growth in the
construction sector. Big projects like the Bugesera Airport and construction of
secondary cities have raised the demand for cement in recent times.
In 2013, the local demand stood at 493,587 tonnes.
Cimerwa prices have also remained high, and imports
from the region from the likes of Hima Cement and Tororo Cement from Uganda as
well as Twiga and Simba from Tanzania which are cheaper and offer higher
volumes, have progressively eaten into the cement maker’s market share.
Cimerwa cement currently sells at Rwf9,800 ($10.83)
a bag, compared with Rwf9,200 ($10.17) for the Twiga and Dangote brands.
Cimerwa, which was commissioned in 2015, says that it has limited capacity for drying limestone, which has high moisture content from the hot water springs near the mine. According to the firm, phase one of a “debottlenecking” exercise has helped to boost capacity to above 80% from 65%. The company hopes that Phase II which starts this year, will help the firm reach full capacity by the end of 2020.https://www.theeastafrican.co.ke/business/Rwanda-stake-in-Cimerwa/2560-5170728-79wq6qz/index.html
