Last national cement company collapses after 62 years in operation

CAIRO – 10 September 2018: Due to the continued losses, the Ministry of Public Business Sector declared the liquidation of the National Company for Cement.

The National Company of Cement has been one of Minister of Public Business sector Hisham Tawfik’s most important files since he took up his current position.

The minister announced during his visit to Al-Munufyah University that the factory’s losses have reached L.E. 900 billion ($50 billion) in the past year alone. He also added that the factory is heavily in debt, as it owes L.E. 4.4 billion to the Gas Company and L.E.700 million to the Egyptian Electricity Company. As a result, this would make it nearly impossible to keep the factory operating.

The liquidation process is currently being carried out in several steps. The company’s enrolment in the stock market was written off in August 2018. The next step is selling the company’s stocks in the Suez Cement Company and Al-Nahda Company. The stocks are estimated at L.E. 400 million.

The company’s lands and factories will then be sold to pay the workers’ receivables, which will amount to around L.E. 500-700 million, according to the agreed upon compensation.

The minister said that the workers’ rights will be granted; those who are above 50 years old will get pecuniary compensation, while the younger workers will be moved to other cement companies.

As the National Company for Cement dissolves, a question arises about who takes the responsibility for the loss of about L.E. 5 billion of national money. The ministry ducked any responsibility for this issue in a previous statement.

The ministry stated that the company’s losses amounted to 138.3 million, 119.9 million and 971.3 million Egyptian pound in the years FY2014-2015, FY2015-2016 and FY2016-2017, respectively. In the most recent financial year, the company’s losses were the highest among all public sector companies. These losses were incurred due to the high cost of production, as the cost of producing a ton is 60% higher than the average cost in other competitor companies.

Moreover, the wages value in the company has reached 355 millions in 2016-2017, with an annual average of L.E.12,000 for a single worker. This average is double the average wage in other public sector companies.

Also, the company’s debts for the petroleum and electricity sectors amounted to LE 3.7 billion. As a natural result of the aforementioned losses, the shareholders’ shares completely diminished to -769 million pounds.

Aside from the companies’ financial loss and debts, The National Company for Cement does not comply to environmental conditions, according to official reports. These violations are of grave danger for the workers and citizens living in the vicinity of factories.

Other significant violations include assigning the operation and maintenance duties to foreign companies, costing the company about LE 360 million annually, as well as the clear deficiency in the contract of developing the production lines.

The contract did not specify the standards, conditions nor the commitments of the consultant and the contractor. For this deficiency, the development was not carried out as required and led to a huge increase of gas consumption. The company has forwarded these violations the public prosecution.

On 26 February 2018, the company’s board unanimously decided to keep fully paying the main workers’ wages, in addition to 300% of the main wage in an annual production incentive for 4 more months despite the ovens’ shutdown until 31 May 2018.

The National Company for Cement’s story sheds the light on the plight of public sector, as more than 30 companies suffer from similar issues.

Additional reporting Abdel-Halim Salem