East African Cables Gets Sh20b Contract With Kenya Power To Supply Cables

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Hope has risen for East African Cables as it landed a lucrative Sh20.2 billion contract with Kenya Power to supply cables that will be used in the Last Mile Connectivity programme.

This deal will stem the tide of Kenya Power which has been importing cables from Chinese and Indian manufacturers, spending billions of shillings a year to purchase copper transmission wires, which are required to connect electricity to households and industries.

East African Cables which exclusively manufactures electricity transmitting cables has faced increasing competition from these Asian giants is now banking on a share of these Kenya Power billions to appease shareholders who have gone without dividends for years.

The management of the company led by board chairman Zeph Mbugua said that they are so confident about the impact of this deal that it has assured investors that they would take home dividends this year. The company suffered a loss of Sh1.09 billion last year.

At its recent AGM, Mr Mbugua said competition from Chinese and Indian products, as well as a fall in metal prices internationally affected the company’s performance in the last financial year.

He also blamed a long process of constructing a new aluminum plant which took two years, as well as time spent replacing old, worn-out equipment as the reason for the low production and therefore the losses posted.

The company’s run-down steel and aluminum plants at its industrial area headquarters in Nairobi could not satisfy the huge demand brought by a booming construction sector that grew by 14 per cent last year.

Also, the cable-maker had sought to improve on modern cable-making techniques, which would lower the cost of production and attract big customers who had hitherto ignored it.

“We always knew the Chinese and Indians will come here. It’s an open market so we don’t complain. For the last two years, we have been putting up new technology which will produce better products than our competitors and hence, we are ready to take over the market again. We are also training our staff on the new technology,” Mbugua said.

He also said any company involved in a long process of replacing its machinery which is in form of heavy copper and aluminum equipment is bound to post losses.

However, shareholders were interested on measures the company was taking to revive itself, and then CEO Peter Arina assured them that the completion of the new aluminum plant and the Kenya Power deal would boost dividends.

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