Japanese conglomerate Toyota Tsusho has been awarded a contract to invest in a fertiliser plant in Kenya.
Toyota Tsusho, which shrugged off competition from three other companies, is expected to invest $1.2-billion in the plant, intended to guarantee a reliable supply of fertiliser to Kenyan farmers at affordable prices.
Agriculture Cabinet Secretary Felix Koskei says Toyota Tsusho gave the assurance that it will embark on the project immediately, as it has already secured financing from a Japanese bank.
“Toyota Tsusho Corporation has already secured financing from a reputable bank in Japan, which will cater for all the construction costs,” he says.
He adds the plant will be constructed in three phases and will be located in the Rift Valley, Kenya’s bread basket.
Phase 1 will involve the construction of a nitrogen, phosphorus and potassium plant, which will later be expanded to have a capacity of 350 000 t/y.
The second phase will produce diammonium phosphate, urea and calcium ammonium nitrogen fertilisers, with the first production expected in 2016.
According to Koskei, construction of the plant is a major milestone in Kenya’s efforts to guarantee food security, as the plant will guarantee affordable prices of fertiliser and could see current prices drop by 40%.
“Forty per cent of the cost of fertiliser comprises freight and handling charges at the port. Having a local plant in the country will see all these costs reduced, thus [lowering] the price significantly,” he adds.
Construction of the plant will eliminate the erratic supply of fertiliser, which has severely affected the agricultural sector in the East African nation.
In fact, rising demand for fertiliser, coupled with high international prices, has forced the Kenya government to import the commodity and sell it to farmers at subsidised rates.
Kenya has the highest fertiliser consumption rate in East Africa, estimated at 500 000 t/y, compared with 200 000 t/y for Tanzania and 25 000 t/y for Uganda. Demand is expected to increase to one-million tons by 2020 and 1.4-million tons by 2030.
The award of the contract comes weeks after France agrochemicals giant Roullier Group announced plans to enter the Kenyan market.
Roullier is one of the largest suppliers of fertiliser in the world and is aiming to capitalise on the huge demand for fertiliser in the East African nation. The company has signed a distributorship deal with Timac Agro Kenya, a subsidiary of MEA Limited.
Efforts by Kenya to have a fertiliser manufacturing plant date back to the 1970s.