The Kenya government’s cancellation of a tender to install a new mill at the East African Portland Cement Company has jeopardised the company’s contract to supply over one million tonnes of cement to Southern Sudan.

The Public Procurement Complaint Committee and Appeals Board recently annulled the Ksh1.6 billion ($22.2m) tender award to KMPP Polysius of South Africa citing serious irregularities in the tendering process.

"This stoppage will definitely have some negative effects on our financial projections and our ability to feed an expanding cement market, especially in Southern Sudan," says the company’s managing director, Zakayo ole Mapelu.

The tender was cancelled following an appeal by New Baron & Leveque International, one of the shortlisted bidders, which claimed that new criteria were introduced at the evaluation stage, hence disadvantaging some tenderers.

The petitioner said that between September and October last year, members of the technical and financial evaluation committee visited the countries of operation of the three shortlisted bidders.

After the visit, the three submitted revised prices and specifications, which was done orally in breach of the tendering regulations.

"The new prices quoted after the visits increased by between Ksh300 milion (US$4.1m) and Ksh500 million (US$6.9m)."

Other companies that bid for the contract were Imasa Ingeniena Montajes - the highest bidder at Ksh1.8 billion ($25m) - KMPP Polysius of South Africa at Ksh1.1 billion ($15.2m); SPM Engineers India, which bid at Ksh857 million ($11.9m); and FL Smith A/S Denmark - the lowest bidder at Ksh737 million ($10.2 million). New Baron & Leveque International bid at Ksh1.2 billion (US$16.6m).

Construction of the new cement clinker plant is expected to increase the firm’s output from 600,000tpa to nearly one million tonnes a year.

The expansion of its grinding capacity is part of the company’s strategy to meet the growing local and regional demand for cement.

"We believe our growth catalyst will come from emerging regional markets of Southern Sudan, Somalia and Rwanda," says Mr Mapelu.

Industry experts say demand for cement has increased following the return of peace in Sudan, the present calm in the Congo and growing cement consumption by the construction industry in Kenya, Uganda, Rwanda and Madagascar.

Demand for cement has grown by about 15 per cent, with the Portland Company’s sales revenue for the year ended June 2005 rising by 29 per cent, from Ksh4.1 billion ($55.4m) to Ksh5.3 billion ($71.6m) - the first time the company’s sales revenue hit the Ksh5 billion ($67.5m) mark.