2 December 2016

Tanzania: More Unfold On Dangote Plant

Photo: Daily News
Dangote Cement plant in Tanzania.

THE government has said it cannot be too generous to foreign investors at the expense of the country and that investors should use local materials to reduce production costs.

This follows information circulating in the media and social networks that Dangote Cement Plant in Mtwara has suspended production due to, among other things, high production costs owing lack of incentives, exemptions or preferential treatment.

Industry, Trade and Investments Minister Charles Mwijage told a news conference in Dar es Salaam yesterday that the plant was using much money in importing coal while they could have saved a lot and reduce production costs by using local coal. According to Mr Mwijage, transporting coal from South Africa to Dangote plant costs 103 USD while from Ngaka Coal Mine (NCM) to Mtwara costs 90 USD, adding that opting for local one was the best option.

The minister noted the company was also using diesel, which is much expensive compared to natural gas. Mr Mwijage labelled Nigerian business mogul Aliko Dangote as 'game changer' since 'he just came to wake up sleeping cement producers who were in position to produce more than the demand'.

Mr Mwijage argued that the government cannot be too generous and violate its own laws and regulations to favour some investors and that nothing has been changed in granting investment incentives.

"It must be understood that we cannot provide everything for free to foreign investors; they also have to pay for some of the services," he stressed.

Mr Mwijage said in 2014 some amendments were made regarding investment incentives after public complaints, but of recent the same people have been blaming the government regarding the same to Dangote Cement Plant.

He pointed out that it was crucial for public to get proper information from proper authorities as providing everything for free would setback government initiative in realising its goal. Expounding further, the minister said the issue of Dangote was exaggerated and rumours spread in social media has based on hearsay.

There were widespread rumours that the 600-million US dollar (about 1.3 trillion/-) plant and the largest cement investment in East Africa, producing three million tonnes of cement annually and directly employing over 1,000 Tanzanians, had suspended its operations "due to high production costs."

Acting Commissioner of Minerals, Engineer John Shija, explained that cement factories had been directed to enter into contract with NCM to help it produce to its capacity of 45,000 tonnes of coal per month.

Eng Shija said as of yesterday, Dangote had no contract with any coal producer, adding the one found in the country was of higher quality and even beyond thermal applications.

Acting Tanzania Petroleum Development Corporation (TPDC) Managing Director Kapulia Msomba said they have been holding negotiations with the cement company since October so that they can run the gas business on a win-win situation.

Eng Msomba said the indicative gas price recommended by TPDC must be approved by Energy and Water Utilities Regulatory Authority (EWURA) and the price to supplying the gas was 5.14 USD, while Dangote wanted it to be reduced to 4 USD.

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