The Treasury has granted the East African Portland Cement Company (EAPC) a four-year moratorium on the repayment of a Sh1.94 billion loan the cement maker borrowed 36 years ago, revealing the firm’s financial difficulties.
EAPC borrowed Japanese yen (JPY) 7.67 billion from the Overseas Economic Cooperation Fund (JICA) in March 1990 but defaulted in 2016 after making partial payments, forcing the government to step in and clear the loan on its behalf. The government cleared the company’s loan with JICA in March 2020.
New details now reveal that Treasury Cabinet Secretary John Mbadi entered an agreement with the company in July 2025, pushing forward repayment dates for the outstanding loan to start in September 2029.
“The government, through the National Treasury, has since entered into an agreement with the company setting out the terms and conditions for the loan repayment. The agreement was executed on behalf of the government by the CS, National Treasury and Economic Planning, John Mbadi Ng’ongo, on July 24, 2025,” EAPC notes in its 2024/25 annual report.
The agreements were entered into when the government was the controlling shareholder of EAPC. The cement manufacturer, however, got a new majority owner in December last year when Kalahari Cement, part of Tanzania’s Amsons Group, acquired a 68.7 percent ownership after multiple transactions.
It is not clear whether the change of control will have an impact on the agreements the cement producer has with the Treasury.
EAPC’s outstanding loan of Sh1.94 billion includes an accrued interest of Sh459.8 million that the EAPC will have to repay the Treasury, with the outstanding principal loan standing at Sh1.48 billion by the end of June last year.
The extension of repayment periods will see the company continue servicing the loan for more than 40 years since it borrowed it to facilitate a cement plant rehabilitation project.
“Subsequent to year-end, the National Treasury and Economic Planning, through an agreement executed on July 24, 2025, granted the company a four-year moratorium, with the first repayment due on September 30, 2029,” Auditor-General Nancy Gathungu noted.
While the company has been facing financial difficulties in recent years, its performance in the year ending June 2025 improved with a 377 percent jump in profits, to hit Sh5.5 billion.
The EAPC notes that the JPY 7.67 billion loan had a 2.5 percent interest rate and had been guaranteed by the government, which later took over when the company defaulted.
While the government intervened and started repaying the loan to JICA on behalf of EAPC since 2017, it left it in trouble with the Stanbic Bank, with which it had entered into a contract to handle repayments through currency conversions.
EAPC sought Stanbic Bank’s services after incurring exchange rate losses since it paid the loan to JICA in JPY while its revenues were in Kenyan shillings.
Under the EAPC contract with Stanbic Bank, the cement maker would make repayments to the lender in US dollars, then the bank would make payments towards resettlement of the loan to JICA in JPY.
“To mitigate the exchange rate risk, the company entered into a cross-currency swap with Stanbic Bank in 2011. The swap converted the JPY loan into a United States dollar (USD) obligation, allowing the company to make payments in USD to the bank, while the bank settled the company’s JPY obligation with JICA,” the Auditor-General notes.
The company made the payments to the bank as agreed between 2011 and 2016, but later defaulted, forcing the government to step in. The default, which caused the EAPCC to terminate its currency swap contract with Stanbic Bank, caused the lender to slap it with a Sh192.8 million bill that the two parties are still in dispute over.
“The company considered the price valuation given by the bank as inadequate as it was not justified with parameters and therefore referred the matter to CBK/CMA for investigation and /or arbitration, ” Ms Gathungu said.
“On 15 May 2018, the bank notified the company of prelisting with credit reference bureau pursuant to Regulation 50(1) (a)- the Credit Reference Bureau Regulations, 2013, unless the company settles the amount of Sh192,855,802.”
The amount Stanbic Bank is asking for would push the loan to over Sh2 billion should the arbitrators rule in its favour.
