SISAL PRODUCERS CONSIDERING EXPANDING TO ENERGY INDUSTRY

BY THE GUARDIAN REPORTER

7th April 2015

A worker in a sisal factory in Tanga Region, Tanzania. More sisal producing companies are venturing into power production. (File photo)

REA Trading Limited, the biggest investor in Africa’s largest sisal producer, is considering expanding into the energy industry, taking a cue similar to what a leading producer of the crop in Tanzania, Katani Limited, took about a decade ago.

The Kenyan company, which is buying out the rest of REA Vipingo Plantations Limited, plans to use waste from sisal to make methane that can generate electricity, Director Richard Robinow said in an interview recently in Nairobi, Kenya. It may then sell that power into the country’s national grid, he said.

“The problem we have today with the current business is its limit on its growth,” he said. “It’s a good business, but it can only grow to a certain level.”

In Tanzania, one of the biggest producer of the cash crop, Katani Limited of Tanga has already taken into various projects, beside power production which come from waste. It started with production of 500 MW.

The government of Kenya, with East Africa’s biggest economy, has a programme to add 5,000 megawatts to the country’s current capacity of 1,664 megawatts by 2017. REA Vipingo operates two sisal estates in Kenya that produce about 12,000 metric tons a year of the fiber, which is used to make rope and dartboards.

REA Trading, which owns 57 percent of REA Vipingo, was until March 26, 2015 in a dispute with Centum Investments Ltd., Kenya’s biggest publicly traded investment group, about taking over the producer.

The two settled their disagreement, with Centum withdrawing its offer to buy the sisal company and acquiring 9,646 acres (3,904 ha) of land in the coastal district of Vipingo as well as REA Vipingo’s subsidiary Vipingo Estates Ltd. for 2.1bn/- (US$23m).

The RVP Minority Shareholders Association, which has 5,863 members, is “disturbed by the preferential treatment of Centum Investments in the acquisition of RVP by REA Trading,” Moses Mandu, the general secretary of the body, said in an e-mailed response to questions March 30, 2015.

The association wants REA Trading to raise its offer price to 500/- a share from 85/- now, and will refuse to pass resolutions at the April 28 annual general meeting, he said.

The REA Trading deal is “fair,” Robinow said.

“It’s not in my view detrimental to minority shareholders,” he said. “We are selling land to Centum at what I believe is a very fair price and I own 57 percent of the company. I have the most to lose if I sell below the market price, and I have no intention of doing so.”

REA Vipingo shares have been suspended since Nov. 13, 2013, when REA Trading first offered to buy remaining investors’ holdings.

SOURCE: THE GUARDIAN