4 December 2012

Uganda: New Factory Could Lower Cement Prices

As Uganda experiences growth in the construction industry, a new cement manufacturer is setting up shop in the country to widen the options of materials on the market.

Dao Group, a company based in Kuwait, plans to put up a third cement factory in the country, and will compete with Hima Cement in Kasese district and Tororo Cement in Tororo district. The company has branches in Iraq, Pakistan and the Middle East, mainly dealing in oil and gas, power generation and transmission as well as construction.

The entry of a third player will come at a time when a 50 kilogramme bag of cement costs Shs 32,000, up from Shs 27,000 two years ago. Cement is the most crucial element on a construction site, and it takes the highest amount of money during work.

Mohammad Aoun, the Chief Executive Officer of Dao Africa Limited, says the company comes to the market with what they have called improved technology to produce premium finer cement. He added that their prices would be lower than market price.

"Local production for cement doesn't cover the whole demand in Uganda. That is why imports are high. This also causes the prices to go up. Dao will put a product on the market which is less costly and have an edge in price," Aoun said.

President Yoweri Museveni launched the $150 million investment cement plant in Budaka, where ultra-modern machinery will be put up, starting January 2013. The plant will have a production capacity of 5,000 tonnes a day of premium-grade cement. Company officials say this will make the plant the biggest and yet youngest cement factory in Uganda and among the top two in the East African region.

Aoun says the company will also set up its second cement factory to be located in Moroto district. The factory here will produce different varieties of cement, and adhesive for tiles. "When we undertake to do something, we mean what we say. We promised to set up our first business within three months after visiting the President and last week's events showed our seriousness," said Aoun.

By setting up in the Karamoja and Bugisu sub- regions, the company promises to improve the infrastructure in the areas where it operates. Company officials also say their investment will create an estimated 10,000 jobs. The combined number of jobs to be created could double when the Karamoja factory is complete.

Dao Africa, a subsidiary of the Kuwait-based Dao Group, is also in the process of setting up a marble factory in Moroto. Shaban Sserunkuma, the Investor Support Envoy to DAO Group, says the company had planned to set up in Moroto first but because of challenges of electricity, infrastructure, workers' living, schools and medical facilities that were heavily lacking in the area, they decided to move to Budaka first.

Their work in Budaka will inform the setup of the second factory in Moroto, he said.

Sserunkuma says the company has already carried out an environmental impact assessment with National Environment Management Authority. "We will try as much as possible to be sensitive to the environment and we have bought equipment with better technology that minimises on waste emission into the environment," Sserunkuma says.

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