The government has repossessed the Rwanda Cement Company Ltd, following a failure by the Rwanda Investment Group (RIG) to meet its financial obligations and to improve the production capacity of the firm.
The firm, also known by its French acronym, Cimerwa, is expected to receive a massive investment of $130 million from the government and its funding partners to enable it satisfy the huge demand for cement that is driven by the construction boom in the country and the region.
The decision by the government has already seen a new management team being put in place to run Cimerwa, which is an exclusive cement producer in Rwanda.
Cimerwa has been unable to improve its production capacity despite going into private hands, which was meant to improve its capacity and efficiency.
The development, come hardly five years after Cimerwa’s privatisation, that can be said to raise some doubts about the handling of the privatisation process in the country.
“When Cimerwa was first privatised in 2006, RIG was the major investor, with a 90 percent stake and the government remained with 10 per cent. But due to challenges in raising long-term finance for a new plant, the government decided to increase its shares in Cimerwa Ltd,” the new Managing Director, Rolf Anttila, said during an interview.
It has emerged that RIG was unable to mobilise the massive funding required to turn Cimerwa around as was stipulated in the privatisation agreement. This put the RIG deal on a shaky path since cement production is a capital intensive industry.
The government then decided to move in to save the situation of meeting the huge demand for cement.
“The only way forward was to increase our plant capacity to meet the ever growing demand for cement,” Anttila said.
He said that the new plant will add over 600,000 metric tonnes of cement annually to Cimerwa’s current capacity of 100,000 metric tonnes.
“When complete, it will be the largest investment so far in Rwanda, it will also be a very important achievement because the investment will be 100 percent Rwandan, spearheaded by the Rwanda Social Security Board, ” he said.
For full details of the story, see Interview Section.