A signpost near the entrance to the East African Portland Cement Company factory in Athi River.
The East African Portland Cement (EAPC) is hiving off 1,507 parcels of land to settle Sh2.5 billion workers' salary arrears, underlining the company’s financial challenges that have left it unable to meet obligations.
The land meant for transfer is part of 7,136 parcels valued at Sh4.6 billion that EAPC plans to dispose of, the company disclosed in its latest annual report. Already, 251 parcels have been offered to staff.
“A total of 7,136 landholdings have been identified for disposal. Out of these, 3,492 parcels have been allocated to squatters who successfully met registration and deposit conditions. In addition, another 1,507 parcels have been set aside for staff debt repayment, of which 251 parcels have already been offered to eligible staff members for this purpose,” EAPC says in the annual report for the year ending June 2024.
The use of land to settle salary arrears follows a 2016 court ruling in favour of contract workers employed by the EAPC in a collective bargaining agreement (CBA) dispute.
The contract workers, through the Kenya Chemical and Allied Workers Union sued the cement manufacturer for failure to include contract staff in a CBA that only benefited permanent employees.
Contract staff
The employment and labour relations court ruled in their favour on July 6, 2026, ordering EAPC to extend CBA coverage to contract staff.
“Historically, contract staff at the company have not been included under the CBA, and instead, management maintained separate mutual payment arrangements with them.
“The Company is in talks with the affected staff to settle the debt through land debt swap arrangement,” the company says.
During the year under review, EAPC had a total of 465 employees, 87.3 percent of whom were employed on contract terms.
A section of the East African Portland Cement Company plant in Athi River on January 25, 2023.
The company reported that it had staff payables amounting to Sh2.51 billion by end of June 2024, down from Sh2.55 billion during the previous year.
Auditor-General Nancy Gathungu, in her latest report on the company, pointed the unpaid salaries as being among the company’s major contingent liabilities.
“Details of the significant claims include employees’ related claims arising from unpaid salaries based on the CBA terms with an estimated exposure of Sh1.5 billion,” Ms Gathungu said.
The company projected it would spend Sh607.4 million in gratuity payment to staff whose contracts ended between September and December 2024, with total staff payables during the year amounting to Sh2.51 billion.
EAPC reported cases of having arrears to its staff related to legal cases and unpaid amounts to former employees who were laid-off in a previous restructuring.
In the annual report, the company reported that it has held assets valued Sh4.656 billion for sale, out of which assets valued Sh2.27 billion are non-current and Sh2.38 billion are current.
The company said the classification into current assets was based on “the value of plots with active applications.”
This is not the first time EAPC is using land to settle debts, since it has previously hived off a parcel to settle a loan it had defaulted on.
Key lenders
“The company defaulted on a loan from one of the key lenders in September 2019 and obtained approval from shareholders to dispose of some of the idle land to pay the debt, which was paid in November 2022,” the Auditor-General revealed.
The Auditor-General has severally queried the company’s financial health due to its continued operation with a negative working capital, which has left it operating significantly below its capacity. In the year ending June 2024, EAPC had a negative working capital of Sh6 billion.
East African Portland Cement Company.
The company has 14 parcels of leasehold land measuring 4,626 acres, with an average value of Sh5.329 million per acre. This sums the total value of EAPC land to Sh24.65 billion.
Out of the 7,136 land parcels EAPC has marked for disposal, 3,492 parcels measuring 909 acres are to be transferred to informal settlers who have been sitting on the land for years, following the company’s decision to sell to them.
“Meanwhile, 2,127 parcels remain available for disposal through public bidding. Evaluation of the bids received from public advertisements is ongoing, with a view toward further disposal of unclaimed parcels,” EAPC says.
EAPC has faced serious financial challenges in recent years and has defaulted on several obligations, including failing to remit statutory deductions and taxes.
By the end of June 2024, the company owed the Kenya Revenue Authority Sh3.879 billion in unremitted Pay-As-You-Earn taxes (Sh2.9 billion) and value-added tax (Sh893 million).
The company had also accumulated unremitted pension liabilities of Sh227 million, mining levies of Sh195.8 million and had not remitted Sh101.6 million in unclaimed dividends to the Unclaimed Financial Assets Authority, the annual report shows.
pmburu@ke.nationmedia.com
