The Competition Authority of Kenya (CAK) has opposed the import duty increment on clinker proposal by Devki Group with concerns that it would distort the market and set the stage for unfair competition.
Industrialist Narendra Raval proposed import duty increment in the cement industry, citing the sufficient capacity to supply the aggregate local demand for clinker in the country.
In a letter to State House, the Treasury and other government departments, CAK says Devki’s proposal to raise clinker import duty will entrench National Cement’s position as a cement manufacturer and a clinker supplier placing it at a position of foreclosing competitors and barring entry into the market.
“Further, increasing duty will make it more costly for firms to import clinker yet sourcing from local manufacturers is even more expensive.The proposal seems not to be attending to an existing market/consumer problem but a private/shareholder investment strategy,” read the letter.
However, Kenya Association Manufacturers (KAM) and the National Independent Verification Committee commendend the move and asked for a four-year grace period before the country raises tax on imported clinker.
According to the association, the four-year period will enable the non-integrated companies and those with ongoing expansions to set up their clinker facilities for self-sufficiency in terms of quantity and quality.
The verification committee also want a national clinker standard to be developed by the Kenya Bureau of Standards (Kebs) to harmonise and enforce quality specifications.
The National Cement company said its considering laying off 860 workers at its Emali-based clinker plant due to low business, citing increased imports of the raw materials, leading to unused capacity.
“We had hired additional staff in line with our expanded clinker capacity so as to satisfy local demand, but imports are eating into this market. It is therefore difficult to sustain jobs when there is no demand to allow us to operate at full capacity,” said Raval.
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